Flipped houses are also called fixer-uppers, and they are also the ideal way to earn hard and fast cash in real estate business. Flipping homes is becoming somewhat a fashion. Because of trendy TV shows about remodeling houses, fixer-upper properties are becoming increasingly popular. Not only are real estate professionals getting into the game, but also regular folks are entering the market. Buying and selling fixer-upper promises a profitable ROI. Find a depreciated property, turn it in a livable and furnished place and sell it for a profit. When done right, this trade can get you massive returns.
Buying A Fixer-Upper Profitable or Not
Investors invest in fixer-uppers for a great many reasons. There are two popular reasons for buying a fixer-upper.
- To sell and earn profits.
- To remodel the house according to one's taste and live in it.
However, you need to make up your mind before buying the fixer-upper. Whether you are buying it to resell or use, this decision can make a huge difference when renovating the house. Fixer-Upper Property for Personal Use
Tuning a dusty and musty place into your dream home is not an easy feat. You need an imaginative eye and strong motivation to turn a dead house into your dream one. A vacant and cheap house gives you a lot of room to be creative and inventive. You can either follow the existing plan and return the house to its former glory or change everything from top to bottom and create a whole new design. Either way, you can go a long way and create a true masterpiece.
Fixer-Upper for Rental Purposes
If you have always had the dream to manage a property and become a successful landlord, you can turn your fixer-upper into a passive money-making machine. Long term renting is one foolproof way of making money. The income might be passive than flipping houses, but it will be long-term and stable. Buy a neglected property; invest time and effort as well as money to make it a practical rental property. However, make sure your renovation is according to the taste and preference of your future tenants. A popular rental property reaps more benefits as you can charge a higher rent rate. Ensure that your tenants sign a yearlong lease, this way; you will have a stable income all around the year.
House Flipping:
Flipping is the new trendy word for a fixer-upper. Purchase a rundown house; pour in money for remodeling and sell the house for profit is how house-flipping works. The years 2008 and 2012 were the best years of house flipping, as many were finding it hard to pay mortgages. Due to this foreclosure rate picked up and real estate inventory inflated. It was no wonder that hundreds of investors, both immature and mature, seized the opportunity and used it to buy, fix, and flip houses.
House flipping is still a pretty popular branch of real estate, and it still reaps massive benefits. However, the profits are still lower than they were in the beginning. The availability of foreclosed property is decreasing as the market is, at the moment, pretty stable. Not only that, but the competition is making it tougher to find, renovate, and sell fixer-uppers.
A Hybrid Fixer-Upper:
A hybrid model comprises of two in one plan. Buy a house, fix it, and enjoy it for a couple of years. After that, sell it for a profit. This model is the best one for a fixer-upper. You build your dream house, enjoyed it for years and now you are selling it to make a hefty profit what can be better than this for an investor and an artist? This model is what you call the best of both worlds. This model also lets you sell the property when the demand and ROI are the highest. However, for such a model to work, you will need a reliable backup.
Your Remodeling Strategy Matters the Most:
You end game and strategy matters a lot when you are buying a fixer-upper. If you are thinking of renting out the remodeled house, you will need to think like a landlord and buy a property that will suit the future renters. Seek out rent-able properties if you have a plan to turn your shabby investment into a hub of renters.
The location, as well as the targeted audience, plays a huge role if you are thinking of turning the fixer-upper into a rental investment. If your targeted audience is families and elders, you will need to make sure your rental is in a safe and secure community with plenty of schools, colleges, and hospitals nearby. If you are targeting the working class, you will need to ensure your place is close to public transport.
Different stages of remodeling:
Fixer-uppers come in all shapes and sizes. Hence remodeling for each differs. Consider the following:
- Cosmetic Changes: this type of remodeling is done when the house is in a fairly decent condition, and all you need are some cosmetic changes to make it look better.
- Strip to Stud: this type of remodeling is done when nothing but the main structure of the house is intact.
Cost Assessment:
The first rule of buying a fixer-upper is to consider the costing. Hire a realtor and property manager and assess the cost of renovating the fixer-upper you have sought out. You can also partner with a real estate agent who will help you sell the house in the future. Get the property thoroughly inspected and find all the flaws before setting out to renovate the property.
Construction Team:
You can hire a full-cycle turn-key constructor who will take care of everything from assessment to renovation, or you can do the whole thing yourself. The full-time team will take over 25% of the commission, but they will save you from a lot of headaches. On the other, then do it yourself strategy with not only time money time but also a lot of effort; you will also need to hire a professional from time to time to assess your work.
Bottom Line:
For a fixer-upper, it's better if you finish the remodeling as soon as possible. So, we suggest you go with the first option and hire a full-time team. After that, sit back, relax, and enjoy your hefty ROI.
If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.
As a top producing Realtor and Property Manager; Terry specializes in sales, extensive construction homes, rentals, REO’s, short sales, and all aspects of Real Estate. After graduating the University of Michigan with a master in MBA, Terry continued his endeavor and now has over 15+ years of experience in the Real Estate world. If there is anything that has to do with Real Estate and sales, you can always be sure of Terry to provide important, specialized knowledge.
