Purchasing a fixer upper can be a great way to enter into a property with equity from day one. Fixer uppers are essentially other people’s problems that you’re dealing with, which comes with upside, but also with work and risk.

What should home buyers be aware of when looking for a fixer upper?

When looking for a fixer upper you need to have an even stronger grasp of the numbers involved than if you were purchasing a move-in ready property. This is because you’re now dealing with two sets of number: the property itself and the repairs.

If it is a job you have not done before or are unfamiliar with, there may be additional cost associated that you are unaware of. It’s best to seek the help of a trusted contractor to help you look for additional issues that may have gone unnoticed and to help you estimate the costs of repair. However don’t expect this service for free. Pay your contractor handsomely for their time during this stage and you’ll avoid even costlier mistakes.

Another thing to look for is if the home has had any renovations in the past. If so, it’s a good idea to check with the local building department to ensure that everything was done to code. If it was not done to code, it is going to be your job to get it corrected so you can get the most value out of your home when it comes time to sell.

What are the most valuable improvements or renovations to make to a property in terms of rentability or resale?

Some of the best areas for improvements you can make with value in mind are bathrooms, kitchens, and curb appeal. However never underestimate the value of a new coat of paint. If you only have the time to concentrate on one area, you should spend it improving the landscaping and curb appeal of the home.

How do you choose the right contractor for the job?

Always make sure that with whomever you choose that they are licensed properly with the building department. Try to choose one that carries insurance as well as the mandatory bond. Also you get what you pay for so if you are bidding the job out and someone comes in a lot lower than what others are quoting there is a reason why. Don’t overspend, but also more importantly don’t under spend.

➡️ Chapter 30: Buying Short Sales