While not everyone’s first choice, there are numerous advantages to purchasing a fixer-upper home. A big draw-card is that these homes often sell for far less than other homes in the same neighbourhood, which means that if you have the capital to spend on renovating the property, you could secure a higher profit margin when you sell. Obviously, this is dependent on how savvy you are with your money when renovating the home.
It is said that an investor makes their money on a property purchase when they buy and not when they sell because the success of the investment is based on the decisions made at the beginning of a transaction. If the right decisions are made, it is more likely that you will see a healthy return. The ideal home could be covered under a veil of various essential repairs that would normally chase away potential buyers. However, you will need to see past the property’s outward appearance and envision the home’s true potential.
Here are some tips for those looking for the perfect fixer-upper:
Location is a key factor
The location of a property will have a greater impact on its investment potential than any other factor. Where a home is situated will firstly determine its current value, as well as its potential for future growth, which is why it should be the primary focus when deciding whether a home is a good investment.
Several factors determine whether a location is considered to be preferable, such as its proximity to a range of amenities. These would include shopping centres, entertainment areas and good schools to name a few.
The home’s layout
It is far easier and less expensive to renovate a home as it stands than change the layout of the home completely. Ideally, the shell of the home should be well designed and laid out correctly. If you intend to add more rooms, then it is important that the current layout of the property allows for that to ensure that there is not a disconnect in the flow of the design. In certain instances, it is better to walk away than try and correct a poorly thought out floorplan.
It is important to assess the structural integrity of the home before purchasing it. Although most defects are repairable, structural damage will be very expensive to fix. If you are fully aware of all defects the property has, you will be able to make a call as to whether it is worth the time and money to repair. A good fixer-upper is at least in a liveable condition. Upgrading or repairing cosmetic issues is one thing, but major repairs to the structure or foundation of the home will severely eat into any potential returns on the investment. If unsure of anything, seek the advice of a professional contractor who can inspect the home and provide you with a full list of defects. It’s better to go into an investment with both eyes open, than blindly hoping for the best.
Much like any other important financial decision, it is advisable to gather as much information as possible to make an informed decision that will pay off in the long run.