One of the nice aspects about buying a fixer upper is that the purchase is not contingent on the temperature of the real estate market, anytime is a good time to buy a fixer. Especially if you buy the fixer for less than everything else around it. The advantages are obvious:
- Lower sales price
- Less competition (not everybody wants a fixer upper)
- Potential for resale profit
- Gain repair knowledge, which will help you to properly maintain the home
- Personal satisfaction when the projects are completed
The Ideal Fixer Upper Home
The perfect fixer upper is the home that everybody wants when fixed up but few can see past its imperfections to buy. The peeling paint, sagging ceiling or worn carpet are correctable features that turn off many home buyers. They can't see past the disarray. Most First Time Homebuyers want to buy a home in pristine condition, one that is turnkey and ready to occupy.
What to Look For in a Fixer Upper Home
You've heard it a million times but it's true -- location drives saleability. Don't buy a fixer upper that is located on a busy street, next to a school or across the street from a power plant. Look at fixers in desirable neighborhoods. That doesn't mean you can't make money on a ghetto fixer, but given the choice, wouldn't you prefer a sought-after neighborhood?
The best type of fixer upper to buy is one that will appeal to the largest pool of buyers, which is a 3 bedroom with more than one bath. That's not to say a two bedroom isn't profitable, especially in a neighborhood of primarily two bedrooms, but three are better. If three bedrooms are better, four are better yet as some buyers who need a four bedroom will not consider a three bedroom, but a three-bedroom buyer will purchase a four bedroom.
If the home is chopped up with a bad layout, realize that it can be expensive or impractical to move walls. The layout should flow. Bedrooms at opposite ends of the home will turnoff buyers with young children, as will a two-story with the master upstairs and the other bedrooms downstairs. Kitchens with more than one entrance are desirable. Some buyers do not like dining rooms serving as the central focal point of the home, from which every other room is accessed.
What's a major rehab to one home buyer is a walk in the park for another. Consider your expertise and whether you want to tackle a home that requires a major renovation to make it habitable. Minor cosmetic improvements are typically less costly and easier on your budget.