Investing in real estate can be a fantastic way to make some money. However, instead of buying newer homes that boast brand new features, consider investing in what’s called a “fixer-upper.” Fixer-uppers tend to need a little bit of work before they can be sold, but because of this, they are usually more affordable than newer properties. This can lead to larger profits when you actually renovate the home and flip it for a higher price. The following are several things to consider when finding the perfect fixer-upper as well as what types of renovations will net you the best ROI.
Finding the Right Fixer-Upper
To find a fixer-upper with the most return investment potential, you need to do a few calculations before you commit to buying. There are dozens of elements that can impact a home's return investment, so here are a few of the major players:
- Hidden Problems – Older homes are more prone to issues such as cracked foundations, leaky roofs, termites, and more. They also tend to have older wiring and plumbing systems, both of which can be costly to replace. Have a home inspector come to do a thorough analysis of the home so that you won’t be surprised by any hidden issues.
- The Right Neighborhood – There may be very few problems with the house other than the need for cosmetic restoration. However, if the house is located in a neighborhood that isn’t very desirable, then you’re going to have a tough time flipping it for a profit. Look to see how much houses are selling for in the area, check the crime rate, and find out how the school system for the area is.
- The Final Numbers – Once you have crunched the numbers, tack on an additional 10 percent to cover unseen expenses.
Investing in the Right Renovations
Once you’ve found a fixer upper that you can actually turn a profit on, it’s time to figure out what renovations will provide you with the highest return on investment:
- The Kitchen – Upgrade the appliances to more energy efficient current models. There are also plenty of smaller renovations you can make, such as adding better light fixtures, replacing the cabinet hardware, and repainting the walls.
- The Bathroom – The bathroom is right behind the kitchen in providing the highest return investment. Replace or refinish old tiles, old tubs, and old sinks. Add new cabinet hardware and upgrade your bathroom fixtures with more efficient low-flow models.
- The Flooring – You don’t want any of the flooring to look worn out. Damaged vinyl floors or worn out carpeting should be replaced.
- The Lighting – Proper lighting will make the house look more spacious and less gloomy. Look for energy-efficient lighting fixtures that add to the interior design as well.
- The Windows – Older windows tend to be less energy efficient as well as more difficult to operate. Replace them with more energy efficient models.
- The Walls – Remove tacky wallpaper and repaint the walls if they are showing wear or simply outdated. Use neutral colors instead of personal favorites.
- The Landscaping – Make sure the yard looks nice and tidy, and consider planting flowers or fixing the sidewalk leading to the house. Curb appeal has a huge effect on attracting homebuyers.
A fixer-upper can be a great investment; however, make sure to keep these tips in mind in order to turn a profit. For additional real estate investment advice, be sure to contact us at Carrington Real Estate today.