Investing in distressed homes can be a great way to turn a profit. You can buy fixer-upper homes and make money in a number of ways. You can complete renovations and turn the property into a rental. Alternatively, you can flip the house after fixing it up to sell it for a massive surplus. Regardless of what you decide to do with your renovation project, your first priority is finding the right property. We’re here to help. Keep reading for a quick guide on how to get a great deal on renovation properties for sale.
Determine Your Budget
First and foremost, you need to consider your financial means. How much money do you have to spend on a fixer-upper? If you are planning on taking out a loan, how much money can you get approved for?
Remember, the figure you come up with needs to cover the cost of the home as well as the updates and repairs. You can save a ton of money on buying a distressed home with good bones. Yet, you must make sure you have enough money set aside to renovate the property.
Whether you’re planning on selling it or renting it out, it must adhere to high-quality living standards. It also needs to attract buyers or tenants based on its own merit.
Identify Your Goals
With your budget in mind, it’s time to think about your goals. Do you want to turn your renovation project into a rental unit that will provide a passive income stream? Or would you like to fix and flip the house for a big one-time payoff?
There are pros and cons to each option. Just as importantly, what you decide will help you determine which renovation properties for sale are best for you.
If you’re planning on renting the home out, you can be a little more relaxed about the location. You also won’t need to invest in luxurious features or high-quality materials.
Conversely, if you’re planning on selling the home for maximum profit, location and quality are exceedingly important. You’ll need to find a fixer-upper with potential that’s located in an attractive neighborhood.
Search for Homes That Have Been on the Market for a While
One of the best ways to get a good deal on renovation properties for sale is by shopping for homes that have sat on the market for a while. You should also look for homes that have been relisted.
Homes that fall under these categories are having a hard time selling. That means two things.
First, the home probably has a number of issues that most buyers aren’t willing to overlook. It might need a new roof, updated plumbing, etc. Or maybe there is a laundry list of damages that the average buyer doesn’t want to deal with.
Second, the seller is likely desperate to sell the home. As such, they’ll be more willing to negotiate with you and sell the home for a low cost.
Pay Attention to the Location
As noted earlier, the location of renovation properties for sale can have a major impact on their price and potential. If you’re looking for a screaming deal, don’t hesitate to look for fixer-upper homes in areas of town that are considered low income or less-than-deal.
These properties will be cheaper and easier to obtain. Furthermore, low-income neighborhoods are excellent locations for rental properties.
On the other hand, if your goal is to fix and flip a distressed home with good bones, find renovation properties for sale in better neighborhoods to maximize your potential earnings. A better location will increase the value of your renovation project. It will also attract buyers with higher incomes.
Shop Through Cash Home Buyers
One thing most people don’t know is that you can get a great price on rundown homes by shopping through cash home buying companies. These companies buy homes in any condition from sellers who are struggling to make a sale. As such, they have a plethora of homes to offer property investors like you.
Look through these fixer-upper homes for sale to see if any of them will work for your goals. This can streamline the process and help you get started on renovations much faster.
Have the Home Properly Inspected
As noted earlier, renovation properties for sale provide amazing opportunities for entrepreneurs looking for an easy win. However, you need to exercise caution when investing in a fixer-upper. Hire a home inspector to complete an in-depth evaluation of the home’s condition.
You need to know exactly what you’re getting into. For example, if the home has a massive pest infestation or a crumbling foundation, it may not be worth your time. Some homes are in such terrible condition that they should be condemned and destroyed, rather than renovated.
Just as importantly, you might not be looking for a massive renovation project. You might not have the time or money to complete major repairs or updates.
Work With a Contractor to Determine Your Potential Renovation Costs
Finally, before you invest in a fixer-upper, bring in a contractor to give you an estimate of your renovation costs. They might also notice issues or damages missed by the home inspector.
We recommend creating a long-term affiliation with a contractor or contracting company to help you save on costs. They can help you determine each property’s potential.
While you might want to do the bulk of the renovations on your own to save money, you’ll probably need the contractor’s help to complete difficult projects. Just as importantly, you’ll need a licensed professional for things like plumbing, electrical, roofing, and other repairs and updates. Otherwise, you won’t be able to sell the home if there’s unlicensed and unpermitted work done on the property.
Looking for Renovation Properties for Sale?
There are countless things you need to think about before investing in renovation properties for sale. We hope this guide helps you make the right choice and find great deals in the process. Do your homework and verify everything through professionals before making any decisions.
And if you’re looking for more financial tips or investing advice, stick around. Read through some of our other articles to find more ways to increase your wealth and live a more successful life.