While most people prefer to purchase a property that is well-maintained and just needs a hand of fresh paint before it’s ready to be moved into, there are numerous buyers who are drawn to the potential of fixer-uppers.
Due to the lack of competition in the market, these homes often sell for far less than other properties in the same neighbourhood, detail which very much appeals to investors. The location the house is situated in, will indeed be a key factor in determining whether purchasing a fixer-upper will turn out to be a good investment or not. This in fact will not only determine the current value, but also its potential for future growth. If the buyer has the capital needed to renovate the home, the location will secure a higher profit margin once the renovation is done.
Investors will need to see past the property’s outward appearance and envision the home’s true potential, but it’s essential they have the time to do their research and follow the right procedures.
In fact, although most defects are repairable, the structural integrity of the property needs to be assessed before the final decision is made, as fixing potential structural damage will eat into the buyers return on the investment.
In short, the home needs to be in a liveable condition at the time of the purchase, and also have a well designed layout. Especially if the buyer plans to add more rooms.
Purchasing a fixer-upper can be an extremely beneficial financial endeavour, but as with all important financial decisions, it needs to be well informed and pay off in the long run.
If the structure or foundation of the home needs major repairs and the floor plan is poorly thought of, it’s best to walk away, as the cost of solving these issues will not make the investment worthwhile.