Categorized | Buying and Selling

Fixer-Upper or Money Pit!

If you watch television, you have seen the shows that turn dumps into pristine dream homes. Fixer uppers can return good profits, but be careful when calculating repair costs. Carefully Consider the Real Cost of that Fixer Upper.

Flip it! Ah, the American Dream to the road to riches. The goal is to find a decent to nice neighborhood with one home that can charitably be considered to have a lot of “character”. Translating this infamous real estate term, the place is a dump and needs lots of work. Home-buyers can be suckers for these homes. They tend to see a low price when compared to the rest of the neighborhood and think they can make a killing when they fix the home up. This can, in fact, happen, but you must be very calculating.

Fixer Upper or Money Pit

The “fixer-upper” is a grand tradition of real estate. Many houses go on the market needing some work before they are truly habitable. Whether your intention is to live in the house or to fix it up and sell it on for a profit, you will need to do some work one way or the other – and because of the work involved, often these houses are available for a bargain price.

However, it should be noted that not every house that is available for a low price is a bargain. Sometimes, people only find this out after doing a lot of work.

A “money pit” is a house which looks like a bargain when you initially buy it, but when you come to realize the extent of the renovations that need to be done before it is even habitable you realize that you will have to spend a ludicrous amount of money.

If you are selling, you may not make a profit. If you plan to live there, you’d have been better moving in to an already suitable house and paying the extra money up front.

Of course, by the time you have found this out, it’s already a little late.

Before buying a house which requires work, it is always advisable to have a survey carried out on the property to find the extent of work that needs to be done.

You may be pleasantly surprised, or you may get a warning that you should not proceed with the purchase.

Although it costs money to have a survey done, it is still immensely preferable to buying rashly and then spending time and money putting that decision to rights.

“Buyer Beware”!

There is a Latin phrase – caveat emptor – which means “buyer beware”. The message intended in those two words is that anyone purchasing the item so labelled needs to be careful.

The price may look like a steal, but ask yourself before you go any further”, who is doing the stealing, and who is being stolen from? You may well find that if a deal looks too good to be true, the reason for that may be that it is far too good to be true.

What you need to be sure of before you sign off on any deal is that the money you have budgeted for the purchase, in addition to the money you have earmarked for any changes to the house, will be recoup-able from the sale of the house.

If you buy a house and then get inside the property to get a close look, the last thing you want is to see that there are problems which will cost a lot more to repair than you thought they might.

Suddenly, your big profit is looking like a small profit, a break-even deal, or even a loss.

Before you buy a house as a “fixer-upper”, think about what needs fixed and do not just look on the surface.

You may need to have a survey carried out on the property to make sure that it is not carrying other faults that could end up doubling what you have to pay to get the house up to scratch for the purposes of selling it.

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