Are you thinking about investing in a home that has seen better days? This can seem like a smart decision, particularly if you’re interested in the idea of property flipping. Flipping properties is a great way to make a solid profit. You can renovate a home that you purchased for less than it’s worth, increase the value and sell it on the market a few months later. However, there are definitely mistakes that you can make here. If you’re not careful, you could end up with a significant loss that you might not be able to afford.
Here are some of the ways to avoid disaster and ensure that you get everything you want when you buy a home like this on the market.
Know The Market
The first step when buying a home like this is to make sure that you do understand the market. You need to know exactly how much you should expect to pay for the property. This is going to help you determine the floor asking price. The ‘floor’ is the absolute lowest price that an owner will agree to sell their property for. This can be quite low but it depends on a few variables. One of the most important is the state of the housing market. Are houses selling for high prices right now? Are they selling quickly? Are there factors impacting this specific to your target location? These are the questions that you must answer before you even think about putting in an offer.
Remember, there will always be signs that a seller is looking for a fast sale and wants to shift the property without delay. They might not be living in the home and if that’s the case, it’s probably already being cleared out. Alternatively, they might have inherited it which means that it will likely have older furniture and designs. These are key signs that suggest a seller will accept a lower offer from the first meet.
Understand The Issues
Next, you need to understand the issues that could mean a property is a far more trouble than it’s worth. Before you agree to buy a property, you should always complete a home survey. This needs to be as thorough as possible and investigate all the different areas of the home. Be wary if a seller doesn’t want you to check areas of the property. They will give you a variety of reasons for this such as damaging their home. The reality is that the damage of a home survey is minimal at best and could reveal a worrying issue like asbestos.
Asbestos can cost thousands to remove. It’s not an issue unless it’s disturbed but if you’re planning on completing renovations on a home, you probably are going to run into this problem. You don’t need to automatically avoid an issue like asbestos. But you do need to take it into account when determining the cost that you want to pay. Or, you should ask the owner to complete this repair before they sell it to you.
There are other issues with a home that might be too expensive for your budget. For instance, you might find that the home has shot water pipes or a problem with the electric wiring. Both can be expensive repairs and the latter can be an insurance nightmare. All of these issues are going to show up on a home survey which is why it’s essential that you do arrange for this service.
Choosing The Wrong Contractor
The temptation will be to try and complete as much of the renovation work on the home yourself. That’s understandable because it’s one way to keep the cost under a tighter level of control. You also can take more pride in knowing that you completed the work yourself.
However, you should only do this if you have the right level of skill and experience. If you don’t have much skill in DIY, then you need to hire a contractor for a significant part of the work. Otherwise, the quality just isn’t going to be there.
When you choose a contractor, you need to think about more than just the cost. Your budget is going to be important. It’s essential that you find a team that will be able to work within your financial constraints. However, you need to go beyond this. Start by speaking to a few different home improvement contractors. Make sure that you already know the work that needs to be completed and the steps that you need to take. Once you have a clear picture of the work that needs to be completed on the home, you can present this to each contractor.
Getting a few different quotes from these contractors will provide you a baseline of what you should expect to pay for the work. You can then move onto other factors including experience and previous jobs that the contractors have worked on. Each contractor should be able to provide case studies. If they don’t have evidence like this, you need to be cautious. It’s possible that they simply don’t have the experience you need.
Forgetting About Time
Finally, when you buy a fixer-upper, particularly when you’re viewing it as an investment, time will be crucial. You need to make sure that you are setting a time frame and a deadline for completing the work. If you don’t do this, then the costs are quickly going to grow out of control. It’s essential that the contractor you choose can work within this time frame too. Remember, you’ll likely be working towards selling when the market is at a certain point.
We hope this helps you understand everything that you need to know to ensure that you do get the results that you want when you’re buying a fixer-upper. If you make the right choices here, then you’ll be able to guarantee that you either make a profit when you sell. Or that you have the building blocks for the dream home for well below the budget that you were expecting.
