Make Big Profits With Fixer-Upper Houses
Many people are enticed by the prospect of making money by
repeatedly buying rundown homes, moving into them, fixing them
up and reselling them for a profit. The strategy has become even
more popular in recent years, thanks to homeowner-friendly
changes in the capital gains portion of the federal income tax
code. Given all the right circumstances, fixer-uppers can be a
lucrative investment.
The essence of this investment strategy is speed...buy a
fixer-upper property at a bargain price, quickly rehab and then
quickly sell the property. Get in, get it fixed up and get out.
This is a simple yet very profitable and safe strategy,
regardless of external circumstances. Using this technique,
profits are made when you buy at a bargain price, increased as a
result of the rehab process, and converted to cash when the
property is sold.
When looking for a fixer-upper, some experts suggest you follow
this basic strategy: find the least desirable home in the most
desirable neighborhood. Then decide if the expense that is
needed to repair the property is within your budget. When
considering a fixer-upper, whether for resale or to live in with
increased equity, go into the process fully prepared so you will
avoid many surprises.
For your first project, only consider structurally sound homes
in good neighborhoods requiring cosmetic repairs only. Houses
that could use new paint, carpeting or flooring are the least
expensive and offer the fastest potential turnaround. Larger
problems such as bad roofs or faulty foundations are often
prohibitively expensive and undermine eventual profit, depending
on what you got the house for and how much you think you can
sell it for. Watch for vacant homes that have not been kept up
by the owner. These forgotten houses can often have the most
motivated seller you could hope to find.
Have any property you are considering fully inspected and then
get firm estimates for all needed repairs. Make sure that
satisfactory completion of such inspections are a condition of
purchase in any contract you sign. Most importantly, "run the
numbers" to be certain that the potential for gain is truly
there. If you are satisfied on all counts, you may very well be
able to be successful with your fixer-upper project!