Since the mortgage crisis hit the realty market, you can find all sorts of ways to profit from this unfortunate turn of events while improving run-down areas if you just have some knowledge and experience in repairing property. Two instances of this are fairly obvious. First there is purchasing, renovating and flipping houses; and second there is buying rental property. Although lots of people have been hurt by the downturn in the market, for others it is the answer to a prayer.
A good investment for people who are knowledgeable about repairs or someone who can afford to pay someone else is a fixer upper house. A home that is run down can be purchased for a low price, and repairs can be made that will help it to fit in the neighborhood, then the house can be resold or rented. A “flip” is when the house sells very quickly after a renovation. A house is considered a rental or investment property if it’s not put on the market, and rented out instead.
Fixer upper houses can be tracked down in a few different ways. If a house is in foreclosure or if it is in a sheriff sale, it may need cosmetic or structural repairs. The lender or owner of the home is unlikely to make these repairs because they will lose money on the house either way. This lowers the selling value of the home considerably, and creates a good opportunity for a buyer.
Often, a foreclosed house it not up to par with the other houses in the neighborhood. If the property is repaired and renovated to the neighborhood standard, then it could be sold for a much higher price than a home not fixed up. By cleaning up the eyesore of the neighborhood you will help protect market values and make the neighbors much happier. If you plan on renting out the home, a newly renovated house will have a much higher market rent than one in not as good of shape.
Homes being auctioned by tax sales is another good place to find homes that may need repairs. These homes are being auctioned off because the property tax for them is delinquent. There are many reasons a home may be behind on property tax. Perhaps someone got in too deep on an investment. Maybe the home belonged to an elderly person who can know longer afford to take care of themselves, or even passed away. Or they could be the victim of the adjustable rate hike because the Subprime market has yet to be foreclosed upon.
As long as you make sure the home isn’t overly improved, the work that was performed is of good quality, and make sure to stay within your budget, it shouldn’t matter how you obtained the fixer upper houses. You should be able to either flip the house or rent it to someone else, letting them pay the mortgage. No matter what, both you and the neighborhood come out victorious. There is even the possibility that you fall in love with the home and move in yourself.
The fixer upper houses can make excellent investments, if you know how to make the needed repairs, or can have them made inexpensively. You can buy the house in poor condition, bring it up to the standards of the neighborhood, and then sell it or rent it to other people. The term “flip” has been invented to refer to transactions in which people renovate and sell such homes quickly. The practice of flipping houses and buying rental property are wonderful examples of others taking advantage of the current situation. Many people have had drastic and negative experiences, but for informed others it has been a golden opportunity.
- Kent Hamilton
Highlights 
May 18th, 2008 