By Kathy Henne
Whether the market is up or down, buying a “fixer-upper” and updating it can prove to be a profitable venture. As with any real estate investment, however, it’s wise to enter with eyes wide open. Knowledge and caution will help you avoid common pitfalls.
The ideal candidate for such a purchase would be priced roughly 30% below the value of nearby homes, and located in a community with low crime rates and good schools. The only thing you can’t repair or improve is a poor location.
Just because you can improve almost anything doesn’t mean that you should! Avoid homes in need of truly major (and unprofitable) repairs such as the foundation, structural, or complete kitchen and bath renovations. Because these features are simply expected by the buyers, they won’t necessarily add any measurable value to your project.
Another aspect that is often overlooked is your fixer-upper’s proximity to where you live. Keep it within a reasonable drive, because you’ll want (and need) to check on it regularly, probably daily, while your repairs and renovations are in progress. The cost of fuel is high enough these days that you don’t want to blow your profits on your gas tank!
There are occasionally homes being offered at lower prices by banks who have taken them back through foreclosure. If you’re handy or have handy people in your family these homes present a great opportunity.