There's always risk involved when investing on real estate properties. More so if you're thinking of investing on fixer uppers. Not everything could be left up to luck. In fact, there are things you should do to make sure you're not investing on a lost cause. Unless you're buying a potential dream house, there are many things to consider when buying a fixer upper if you want a reasonable return on your investment.
It's quite exciting to find homes that look beautiful if only the lawn was properly maintained or if the house had a fresh coating of paint. It's even more particularly exciting because fixeruppers are usually undervalued. If you don't mind having a little project on your hand and if you really understand what you'll be getting into in terms of repairs or renovations, then it could be quite a diamond in the rough.
Here are a few things you may want to consider:
1. Location - It's still very important to consider where the property is located. Say for example you're looking through Long beach Island homes for sale and you find a fixer-upper, undervalued Long Beach Island real estate, that could be quite a find because the location is quite a desirable one. Just remember that no matter how well you fix up a fixer upper in a bad neighborhood you can't do much to increase its value because in real estate, location makes up for a lot of what the value of a real estate property would be.
2. Floor plan - One of the things that can help you increase the value of an undervalued property is adding a room into the floor plan or opening up an area of the house to make the layout a bit more aesthetically pleasing. However, since these home projects usually need time and money to complete, it's important that you buy a house that has a floor plan which you can already live with. It's going to be quite difficult to live in a house with two oversized rooms if you really need three rooms to accommodate your entire family. You can put in extra rooms and bathrooms later, but it's important that you'll be happy with what you'll have now.
3. Repairs - This is a crucial part of buying a fixer upper. Determine if the repairs that you'll need to do on the house is going to be worth the time, money and effort. Sometimes people look at the potential but underestimate the kinds of repairs that they'll be involved with once they buy the house. It's good to have experts look at the plumbing, HVAC, electrical system, roof, and the likes. Get an idea about how much it's going to cost to have systems replaced or repaired and see if the low price of the house is still attractive after you pile the cost of repairs you'll need to make afterwards. Also, take into consideration how long the repairs will need to complete because you may need to live with the mess for a while or maybe even look for alternate accommodations as the repairs are being finished, which puts more financial stress on you.