Profiting from a Fixer-Upper

There are many real estate investors whose business model is to buy low and sell high. They look for distressed homes that they can buy quickly and at well below market value. Most of the time, these homes are in need of repairs and renovations when they are purchased and that is all part of the investors plan. They have evaluated the current condition and have a good idea of how much they will need to invest to get the house ready to attract attention from buyers when they put it back on the market after renovations are complete.

Buying a fixer-upper is often less competitive than buying a turnkey home because only investors are interested. Older homeowners or someone who has had an accident or health issue and has been unable to maintain their home will often gladly sell to an investor after their home has lingered on the market with no offers. The lack of completion to purchase means that the investor can get the house a bit below market value and be able to get a good return on their investment. Typically a house that doesn’t sell will have the price lowered. Then an investor will note all of the needed repairs and ask the homeowner to consider an even lower sale price to account for the cost of the needed repairs.

Being in the real estate business and using contractors regularly is also a benefit for the investor. Providing regular work to contractors will allow the investor to bargain for better pricing on the repairs and renovations needed. And not only will the prices be lower but when you are working in a tight time window, loyal contractors are known to help out their best customers with fast scheduling and very timely work schedules.

Once the renovations are completed, it is time for the investor to take over and begin the marketing process. It is important to get the word out that this house has now been professionally renovated. It is not the same tired old house that was on the market a few month earlier. Having pictures online and details of all of the new upgrades and renovations will help buyers to understand why the new asking price might be much higher than the asking price was when the property sold just a few months before.

Now that you are carrying a loan on the property and have spent money on materials and labor to improve the property, you need to get the house sold quickly. Having a strong network in the community and being able to sell quickly means that your profit will be larger and that you will be able to move on to your next project more quickly. There are many ways to profit from real estate investments but one of the most common is to buy a distressed property and then invest in it to make it one of the nicest homes in the neighborhood. When you sell nothing but quality homes, your reputation will grow and buyers will begin to seek out properties that you have invested in and renovated because they know it will be nothing but the best quality.

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