Searching for a Fixer-Upper?

Why a Fixer-Upper Could Be the Type of Property You’ve Been Searching for All Along

Many entrepreneurs are investing in fixing up and flipping properties – and it’s easy to understand why! House-flipping can be very lucrative, not to mention the pride and sense of accomplishment that go with a job well done. But there’s a great deal of work involved, so if you’re thinking about taking on a fixer-upper project but aren’t sure where to begin, RE/MAX Northland shows you exactly where and how to get started. 

How to Choose a Realistic Fixer-Upper Property

Not all properties are going to be feasible profit-wise when you're first looking for a fixer-upper to invest in. And while some properties may seem to be the perfect property at first; the truth of the matter is that not all properties are financially feasible. What’s more, SCRIBD points out that you could also end up in serious financial trouble if you don't do enough research beforehand. These are some things that you need to look at to ensure you don’t end up choosing a dud property.

Location Matters a Great Deal

As it is with most housing markets, Cytonn notes that location plays a significant role in how you’ll make your return on investment (ROI) when you do eventually sell the property. The general rule is that the higher the market value of properties, the greater your profit margin will likely be. Do your market research by using sites online that list available properties and show how hot the given market is. 

Try to Keep Renovation Costs Manageable

When purchasing a fixer-upper, your main goal will be to maximize your profits when you flip the property. If you aren't careful, however, renovating costs can quickly reduce your profit margins. If you want to keep your costs down, you should choose a fixer-upper that only requires superficial renovations. 

A fresh coat of paint goes a long way in this regard, as does adding items in the kitchen like a new range hood (which will vent grease, smoke, and odors from your kitchen to keep the air cleaner in the home), or in the bathroom you could update with a new vanity. Kitchen and bathroom updates – even small projects – almost always result in a good ROI. 

Here are Some Fixer-Upper Red Flags

There will be certain properties you’ll want to avoid from the get-go. This includes fixer-uppers without a solid structural foundation, ones with faulty electrical installation, insect infestations, and water damage. Suppose you’re really interested in buying a property but you’re hesitant because you feel that you are inexperienced in what to look out for, then it might be a good idea to have your property inspected to help you look out for problem issues like these.

What Should You Address First?

It can be difficult to choose what project to tackle when there may be many areas to address. However, it’s safety issues that will need to take preference in order to get the property move-in ready as quickly as possible. Then you’ll need to decide what projects you can do yourself and what to leave to more experienced professionals. Roofing projects are definitely ones for the professionals.
Another area you’ll need to consider is the home’s curb appeal. It’s important to maintain a welcoming exterior, and your landscape plays a vital role in that. If you aren’t sure how to approach your landscape, contact a professional team that can design a landscape that works within your budget and creates an attractive exterior for your home. Many landscape companies can also help you maintain your lawn throughout the year.

Tackle the DIY Projects Yourself

Of the renovations you can complete yourself, these will most likely be the simpler tasks such as minor decor upgrades and the odd reno here and there such as redoing a backsplash, adding a hanging shelf, applying wallpaper, and so forth. You can also clean up the interior, but avoid using harsh chemicals. Instead, go with natural options that you can make yourself. 
Almost any home project will require the proper tools to get the job done properly such as drills and sanders to get the shelving positioned and finished just right as well as a tape measure to take measurements correctly, carpenter pencils, utility knives, a jigsaw, etc. And then you can leave the more complex tasks like plumbing, electrical wiring, and roofing to those people with years of experience.

Turn Your Fixer-Upper into a Viable Business Opportunity

Instead of flipping a property, you could decide to turn it into a vacation rental instead to earn a long-term passive income off it. But be sure to register your new venture just as you would any other business. If you aren’t sure how to proceed, you can start an LLC in Minnesota with ZenBusiness, allowing you to enjoy the legal protections and tax benefits that come from that business structure. A formation service can also help with applying for things such as an Employer Identification Number (EIN) to ensure you comply with the IRS and so that you can claim tax deductions down the line. Check out online formation services to get the job done quickly, easily and affordably.

Enjoy Your Venture into Real Estate Investing

It can be very rewarding to flip a property that you have helped transform; that’s why so many people choose this career path! Furthermore, it could just end up being one of the best financial decisions you’ve ever made. Just remember to keep in mind feasibility, location, your budget, and what it takes to register your business with the authorities. It’s also worth setting up an LLC to safeguard your efforts.

RE/MAX Northland is here for all your real estate needs. Call (218) 203-3603.

Image via Pexels; Article compliments of Kristin Louis at parentingwithkris.com