How to Invest in a Fixer Upper House
Picking the right home to purchase can be a chore. Choosing a home that needs to be remodeled, better known as fixer-upper houses, requires a person with vision, time, patience and money. Investing in a fixer upper can provide equity and personal satisfaction if performed correctly.
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Things You'll Need
- Home Inspector
- Home Appraisor
- Contractor
- Real Estate Agent
- Good Discount Home Building Supplier
Instructions
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Contact a real estate agent to help find property ideal for investment. Ask your agent about foreclosures, short sale and REO properties. Many of these properties are offered at much lower prices and are in need of work. They can save you money but can require commitment to bring the property up to living standards.
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After finding the ideal property, have a home inspection performed. even if the property is being sold as is if you still need to know what to expect before the deal is closed. You may find that the property may need more work than you are willing or can afford to do. By having a home inspection, you are also able to get a head start finding the right contractors and materials for your fixer upper.
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Have a licensed home appraiser assess the value of the property. Be certain that there is value in the price of the property. Make sure to ask what repairs or updates to the property will generate the best return for your money.
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After acquiring the property, complete a time line of what work will be done, in what order and for what length of time. Set realistic time goals, especially if you will be living in the home and need to move quickly. Give time for unexpected repairs.
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Interview several contractors for the job. Get bids from each on their services, materials and labor. Be very clear about your expectations and the quality of work expected. The idea of purchasing a fixer-upper home is to save money and also have equity. Choosing the wrong contractor can ruin that goal.
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Shop around to several discount home improvement stores and suppliers for the materials you need. If you can save money by supplying the contractors with materials, by all means do so.
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Be patient and take your time with your fixer-upper house. If the home will serve as a primary residence, make the major repairs and updates as they are affordable. If completing the entire job all at once is possible, then move forward. However, if there are jobs that can wait, do so.
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Once the repair and or updates are completed, have your fixer-upper house appraised again. Assess what was done correctly and what should be changed in the future. Remember, a home is an ongoing investment.
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Tips & Warnings
Look into government funded programs such as FHA, Fannie Mae and FreddieMack who all have programs for the purchase and repairs of fixer upper homes.
Do not set unrealistic expectations on the completion of projects. Do not over spend on expensive materials. If you can get something at discount get it. Do not keep contractors that are not performing satisfactory. Finish all projects; living in a construction zone is no fun.
