What Type of House Makes a Good Fixer Upper?
Many people now days are interested in purchasing fixer uppers. There are many TV shows that are fun to watch and educational about the whole “flipping” process. But there are some guidelines I feel are important to stick by when shopping for just the right home to fix up. Here they are.
Are the home’s issues structural or cosmetic?
Depending upon your skill level as a contractor or just a curious investor, this question is very important for several reasons. First, the more major a repair tends to be, the more costly it may become. Structural repairs may include foundation issues or problems with the roof trusses. There are also permits and inspections required for more serious repairs which cost more money and time. Unless you have lots of experience in fixing major repairs it’s probably a good idea to stick with cosmetic repairs.
Is the layout or floorplan of the home functional?
You can put new paint, pretty tile and carpet in just about any home to make it look and feel more livable. But if the layout is completely chopped up and just doesn’t make sense, it won’t matter how you dress it up, you might have a very difficult time selling the home once all repairs are made. Pick a floorplan that is already a winner. Remember too that sometimes on smaller homes with an attached single car garage you can convert this to a bedroom or whatever kind of living space the home needs. Use your imagination.
Does it pencil out?
Just because a home has potential and a great floorplan doesn’t mean that it will make you money. Do your homework. When budgeting for costs and expenditures don’t forget about selling costs, inspection and permit fees, materials, labor and a healthy amount of padding because what can go wrong might and normally does. If you feel that there is enough wiggle room between the price you pay for the home and your profit after every single imagined expense is thought of, you might just have yourself a winner.
Does it have the potential for a quick sale?
Unless you plan on sitting on this home for a while, it would be wise to determine how long to expect the home to stay on the market once it is fixed up. If you aren’t going to be living in the home while waiting for someone to purchase it, the monthly payment will need to be paid somehow. Don’t forget to add this to your equation. A short term lease might be an option to consider. Price the home competitively enough so that it will sell quickly, and make sure that the local market supports a short turnover.
Meribeth Phipps has been a real estate agent in Washington State since the year 2000.
