Monday, July 23, 2012 / by Larry - Customer Support
At some point many of us have embraced the idea of taking a rundown property, fixing it up and either turning a nice profit on it or just moving into it with a ton of equity. You imagined the idea of taking an old house with no life in it, working your creative magic on it and “breathing” new life back into the home. The dollar symbols from all of the “upside” potential float in front of your eyes. However, if you aren't careful when getting into the fixer upper game, it won't be imaginary dollars floating in your head, but real dollars being flushed down the toilet. Columbus, Georgia and Phenix City, Alabama are prime areas for finding a bargain on a fixer upper home, be it a foreclosure, bank owned, short sale or estate property, but you need to be aware of some key tips and things to avoid during your search.
If you go beyond just dreaming about it and actually are ready to buy a distressed, bargain property, there are things you need to be on the lookout for in purchasing your fixer upper. If you are new to the area and apprehensive about your unfamiliarity with the area, do not fret. Whether you are searching in Columbus, Georgia or in Columbus, Ohio, the principles are the same. Follow these principles and you can make buying a fixer upper a success. Don't make a costly mistake by ignoring or not being aware of these fundamental principles.
- The basic principles of buying a fixer upper to sell for a profit is understanding the purchase and acquisition cost, the holding cost, the repair cost and then what you can expect its market value to realistically be once it is fixed up. It may seem obvious, but never forget this basic principle. Most people (even experienced remodelers) often underestimate the repair cost on a fixer upper property. A good tip is to get a reputable contractor to provide a free estimate on the repairs. You may even consider hiring a home inspector.
- Some improvements, although necessary, don't actually add much value to the home and can cause you to go way over budget. Work on the plumbing and electrical, repairing or installing an HVAC system, making repairs to the foundation, roofs and code violations are all things that can cost a lot of money which won't actually add to your bottom line. The best tip is to avoid these types of repairs as much as possible or make sure you get a double discount on the home for the cost of each type of repair (For example: If there are $4,000 in estimated foundation repairs, try to get a least an $8,000 additional discount on the home). Again, this is an area where a qualified contractor and/or home inspector can be critical.
- The types of repairs with the most upside potential that you should look for are minor and fast cosmetic changes. A house that smells awful with filthy walls and floors can be remedied in a long weekend with some elbow grease and a few gallons of paint. You could realistically add tens of thousands of dollars to the value of a home from a few weekend classes at the home improvement store and some good old fashioned “sweat equity”. Of course you can always hire a contractor but there is less room for error with these types of repairs from unforeseen problems. Focus on the bathrooms, kitchen, the floor plan and the character of the house. Outdated kitchens and baths that can be revitalized with new countertops, fixtures and appliances are things that can be handled easily but having to walk through a closet to get to the “master bedroom” presents more of a challenge.
- Another thing to avoid when buying a fixer upper home are title issues that arise many times with bank owned, foreclosure properties as well as estate and probated properties. There are many good title companies and real estate attorneys in the Columbus and Phenix City area that will provide a title opinion on the house you are buying. You should also always get title insurance which will protect you if a problem does surface. The great news is you can get the seller to pay for this title insurance policy a lot of the time.
- The final and maybe the most important thing to know before you “pull the trigger” is the true after repaired value of the home. You need to be very comfortable with the neighborhood and what homes are selling for that are distressed sales. You do not have to go it alone and do the research yourself. You should find an area expert that you like and trust to help get you the information you need to make an informed and intelligent decision.
The team at RealtyEdge Brokers can provide you with a free market analysis and cutting edge information on the Columbus home market. Our VIP Buyers can get priority access to bank owned homes and fixer uppers that aren’t yet listed on the internet or multiple listing service. Give us call today at 706.320.3343 to find out more information or send us an email to firstname.lastname@example.org.