The Fixer House- Finding the right property
Published: January 11 2010
Refer to previous posts for Steps 1,2, 3
Step 4 is go shopping- find the right house. Ideally, you’ll find something in an area that has seen steady appreciation. Look for the “dog” of the block- a home that you can buy for less than the neighborhood average price. Your real estate agent can provide you with a Comparative Market Analysis- a snapshot view of what’s for sale and what’s sold in the area.
Be aware of the seller situation- most fixer properties got that way because someone would not or could not maintain things properly. If everything you can see is in bad condition, you can be sure that the less visible items have not been taken care of either. Things that ultimately cause people to leave their house are items that they can’t afford to repair- the roof, the furnace, the structure. Assume the worst, budget for the roof, the furnace replacement, the garage floor, the obvious needs. If you’ve done your homework, you can prepare a budget, a timeline, a projected profit. You might have time for contractor bids, but you probably won’t. If a fixer property is a viable project, there will be others waiting to make an offer, you won’t have days to make up your mind if you want to make the offer. You do have an option of getting a home inspection done, this can buy you a few days to get the pricing for the improvements needed. If the house needs too much work, you have spent the inspection fees, but you’re not stuck with a loser project.
Next: The purchase negotiations.