Several years ago, when the housing market was mired in the worst recession since the Great Depression, buyers shied away from houses that needed work. The buyers who weren't put off from buying completely were interested only in turnkey homes that were in move-in condition.
It was too risky for most buyers to buy a house that needed work. But, now that the housing market appears to be recovering, buying a home to fix up seems more reasonable, but is not without risk.
There are basically two types of "fixer" buyers. One is the flipper who buys a home, spruces it up quickly and sells it at a profit. The goal is not to hold the property as an investment, but to find a buyer as soon as possible after the redo is complete.
Flippers should avoid buying homes that have major problems to remedy, which will eat into profits. A way to maximize profit and minimize carrying costs during the rehab period is to buy at a low price with all cash. Buy in areas where employment and transportation are good so that you will have a pool of buyers for your product when it's ready to sell.
BY DIAN HYMER, MONDAY, JANUARY 7, 2013. Inman News®