HOW TO BUY A FIXER-UPPER THAT’S WORTH THE INVESTMENT
One need only watch The Home Channel or scroll across an epic ‘before and after’ video on social media to get excited about the idea of buying a fixer-upper. But, deciding to commit to this kind of project for yourself can be intimidating. How do you know you’re buying a fixer-upper that is worth the investment? If you have your heart set on buying a home to renovate, below are a few factors to help you decide whether it is worth the investment.
What you buy determines the worth of the investment
As counter-intuitive as this may sound, an investor makes their money on a property when they buy and not when they sell. This is because the success of the investment is based largely upon the decisions made at the beginning of a transaction. If you make the right decisions, you’ll be more likely to 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’ll need to see past the property’s outward appearance and envision the home’s true potential.
How to spot a lost cause
The last thing you want is to buy a property that ends up being a lost cause. To protect yourself from a massive financial loss on fixing up the home, it’s vital to do all your groundwork first and find out exactly what needs to be repaired and how much these renovations will cost. As with every home, assessing the structural integrity is paramount before purchasing. Although most defects are repairable, structural damage will be very expensive to fix. If you’re fully aware of all defects the property has, you’ll be able to make a call as to whether it’s 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. For security, seek advice from a professional contractor who can inspect the home and provide you with a full list of defects.
The less to fix, the better the investment returns
A big advantage of buying a fixer-upper is that they 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. This is dependent on how savvy you are with your money when renovating the home. It’s 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 the current layout of the property must allow for that to ensure that there’s not a disconnect in the flow of the design. In certain instances, it’s better to walk away than try and correct a poorly thought out floorplan.
A preferable location equals a worthy investment
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 location should be your primary focus when deciding whether a home is a good investment. Properties close to a range of amenities such as, shopping centres, entertainment areas and good schools is what makes a location preferable.
Reach out to a professional before you invest
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. That’s why it is best to reach out to a real estate professional. As an area expert, they can ensure that you buy the perfect fixer-upper.