How To Get Started In The Real Estate Game Fix Up And Remodel Homes

If you’re looking to start investing in real estate by fixing up and remodeling homes, you’ll want to know what type of property to buy. Many real estate investors make millions by turning ugly houses into dollhouses. On the other hand, some inexperienced investors lose money by buying houses that simply don’t make a profit.

Three tips to help you find the perfect fixative

1. Know your market

Your first task, exploring your market, helps you know a bargain house when you see one. Search homes for sale in your area. Keep track of sales and how long it takes for houses to sell. Ask about the terms of these sales because this helps you understand how sellers market their properties. For example, if a seller paid closing costs for the buyer, did they increase the price from the listing price accordingly? Or, the seller lowered the price and paid the buyer’s costs as well. Examine the sales that sell quickly. What home features and financing options drove the quick sale?

Also, look for model homes. Buyers often resell homes because they can’t wait for a new home to be finished. But these buyers like the conveniences found in newer homes. When you transform your fixer, you’ll know what buyers want and make informed makeover decisions.

2. Know when “bad” can be good

When you’re first starting out in your real estate “fixer” business, you’ll want to look for houses that only need cosmetic work. Look for houses that just need cleaning, painting, and new floors. Don’t be afraid of stinky houses that look awful; look for repairmen with peeling paint, holes in the wall, stained carpet, and patio trash. Remember, these houses will not look good to most buyers, but other investors see them as gold mines. You need to use your imagination when you see these houses. Try to visualize the finished product.

3. Know when “ugly” means “approved”

If the house has cat urine staining the carpet, the subfloor or concrete foundation may need to be replaced. Dog urine cleans up more easily. If the walls have too many cracks and bulges, you may need to hang new drywall or hire a professional drywall repairer. Look for signs of plumbing problems, such as water stains under sinks and loose flooring.

When you are new to real estate investing, always remember your limitations. Be careful when considering houses that need structural repairs. Some rehabbers replace walls, plumbing, structural beams, subfloors, and electrical systems, but they acquired those skills after years of experience or pay a professional.

If you find a home with structural problems, get estimates from reputable contractors to get the job done. Experience teaches you how to do more over time. Until then, trust experienced contractors to do the repairs. Consider professional estimates before deciding whether or not to purchase an investment property.

Why would anyone want to do this? How much does the average investor earn? In Philadelphia, real estate investors only bid on houses they expect to make $30,000 on. In Southern California, many investors earn between $50,000 and $100,000 on each home.

Summary: You can make a fortune fixing up ugly houses. Know your market. Know when “ugly” means bad that can be good, and when stinky means pass.

Copyright (c) 2005 Jeanette J. Fisher. All rights reserved.