How to make money with a fixer-upper?

Let’s start at the beginning, do you know what a “fixer-upper” is?

 If you answered no, don’t worry, I’ll explain it to you!

It is basically a property that needs its fair share of repairs and updates before it is habitable or profitable. Although it may sound crazy, many people choose to buy these types of properties because they are way cheaper than properties in better condition.

Fixer-uppers can be houses, apartments, buildings, or even commercial properties, and the amount of repair they need can vary greatly. From small repairs to large-scale renovation projects, there is everything! And they can be a great investment opportunity.

But before you buy a fixer-upper, it’s important to do a full property appraisal to determine how much work is needed and how much money it will cost you. You should also keep in mind that it can be more difficult to get financing for these types of properties, because their market value is obviously lower.

How to make money with a fixer-upper?

Resale!: If you have savings, this may be your option! You can buy a property in need of repair for less than it would actually be worth at its “prime prime,” give it a handout, and then sell it for a higher price. It is what is known as “flipping”.

Rental: If the property is in a good location, you can make any necessary repairs and then rent it out to tenants. In this way, you can generate monthly income that will help you pay the mortgage and, in the long term, the property can increase in value.

AirBnB: If the property is in a tourist spot, you can make improvements and rent it through platforms like AirBnB. This will allow you to earn a higher income than a traditional rental, but it requires a little more work and management, plus your operating costs will be higher.

Partnering with a Contractor: If you have negotiation and management skills, you can partner with a contractor to purchase fixer-upper properties, make any necessary repairs, and then sell or rent the property. This way, you can take advantage of the contractor’s skills and increase your chances of making a profit.

If you decide to purchase a “fixer-upper” property, make sure you have a detailed plan for any necessary repairs and updates. You may need to work with a contractor or a team of professionals to develop a realistic schedule and budget for the job.

Like everything, investing in fixer-uppers has advantages and disadvantages, let’s analyze them together!

Advantages:

Lower Price: The initial cost of a fixer-upper is generally lower than that of a property in better condition. This can make it more accessible for shoppers on limited budgets.

Personalization: Buying a property that needs to be fixed and updated can be a great opportunity to personalize it and make it your own. Buyers can add custom features and adjust the layout of the property according to their needs and preferences.

Profit potential: If necessary repairs and upgrades are done effectively, a fixer-upper can be a worthwhile investment. The property can increase in value and generate income through rental or sale.

Disadvantages:

Hidden Costs: There may be additional repairs and upgrades that may not be identified during the initial property evaluation. This can result in additional costs and increase the total cost of the project.

Time and effort: Renovating a property can be a long-term project that requires a lot of time and effort. Buyers must be prepared to invest significant time and resources to complete the project.

Financing Difficulties: Fixer-upper properties can be more difficult to finance, as lenders may consider them a greater risk than properties in better condition. Buyers may have to look at alternative financing options.

Stress and frustration: Renovating a property can be a stressful and frustrating project. Buyers must be prepared to face unexpected challenges and deal with the stress and uncertainty that may arise during the project.

Keep in mind that fixer-uppers can be a great project, but they can also be expensive and time consuming to complete. Also, repairs and upgrades can be unpredictable, which means cost and time can increase as additional problems are discovered.

If you decide to purchase a fixer-upper property, make sure you have a detailed plan and work with experienced professionals to minimize risk and maximize investment potential.

It can be a great opportunity to personalize a property and build your heritage! But above all remember, having a positive attitude is key to overcoming the challenges that come along the way!

Until next time!