Finding a fixer upper
Buying and fixing old houses is a lucrative aspect of the real estate business that has attracted hordes of investors. It is always a smart move to buy older houses because their prices are low and they are less competitive. Besides, if you choose this route you can qualify for unique grants and loan programs that can help you with the remodeling or renovation of these houses.
Purchasing and repairing an older home, is not the exclusive preserve of investors. If you are looking for a cheap priced mortgage, you can also go for this option and work on fixing up the place after you have moved into the house. Once the repairs are completed, you may choose to continue living in the house or resell for profit. Before you break into home ownership and try to find a fixer upper.
Here are some valuable things you should know first.
What is Your Motive?
Before you start your hunt, decide on what exactly is your motive. Are you buying to occupy the home or are you investing for a resale? If you are purchasing and want to sell at a later period, you have 2 major options. Firstly, you can remodel and resell. Secondly, you can repair the property and lease it out to a tenant.
There are pros and cons for both options. If you resell the property, you can make some quick money on your investment within a short time frame. Unoccupied homes are always easy to sell off. Alternatively, getting a tenant for your home assures you of a steady income instead of an outright sale. You might need to consider the hassles of getting tenants. It is not exactly as straight forward as it may seem because of this houses have been known to be unoccupied for months. It is important that you have a cash reservoir to cover your mortgage payments for the first few months.
Close Places Best Buys
When you want to buy and fix a house there are places that are a gem. There are other places you should avoid like a plague. For instance, there are some cities that are experiencing a boom in the real estate market. It would be very hard for you to find homes within a lower price range there.
If buying and selling is your ultimate goal, you might want to look outside the usual areas. Multiple service listings provide accurate descriptions of properties in every province, city or town. Use this service and see if you can dig out some diamonds in the rough from adjoining cities, states or towns.
Before starting a fixer-upper project, carry out a comparative analysis of properties in the immediate area. After your remodeling and house improvements, the market value should be the same with other houses in the area. If houses in the area are going for $200,000 and your fixer-upper is meant to go for $300,000 for you to recoup your fix costs, you have a major problem there.
Inspect the House
Before submitting a bid for the house, inspect it thoroughly. You can employ the services of a home inspector. Ensure that the house has been erected on a strong foundation, check for electrical and structural damage as well. If the house requires a large budget how much would it cost you? If the project is too expensive, forget it and look for something else.
If you are operating on a tight budget, avoid properties that require a lot of work. Instead put in bids for properties that require only minimal improvements like carpeting, fixtures, painting, replacing cabinets, plastering and the likes.
Try to also be available when the inspector checks out the house. Use a notebook to make your own observations as you walk through the place. Ensure that you compare different homes before arriving at a final decision. Fixer uppers always need work. So do not expect to find a home that is in top shape just waiting to welcome you.