If you are looking to start investing in real estate by fixing and flipping houses, you will want to know what type of property to buy. Many real estate investors make millions turning ugly houses into dollhouses. On the other hand, some inexperienced investors lose money buying houses that just don’t make a profit.
Three tips to help you find the perfect repairman
1. Know your market
Your first task, exploring your market, helps you recognize a bargain house when you see one. Search for homes for sale in your area. Keep track of sales and how long it takes for homes to sell. Ask about the terms of these sales because this helps you understand how sellers market their property. For example, if a seller paid closing costs for the buyer, did the list price go up accordingly? However, did the seller lower the price and also pay the buyer’s costs? Examine sales that sell quickly. What features of the home and financing options drove the quick sale?
Also, look at the model homes. The buyer often chooses resale homes because they can’t wait for a new home to be finished. But these buyers like the conveniences found in new homes. When you transform your repairman, you will know what buyers want and make informed decisions about the makeover.
2. Know when “bad” can be good
When you first start out on your “repair” real estate business, you’ll want to look for houses that only need cosmetic work. Look for houses that only need cleaning, painting, and new flooring. Don’t be afraid of stinky houses that look hideously; Look for repairmen with peeling paint, holes in the wall, stained carpets, and yard trash. Remember, these homes will not look good to most buyers, but other investors see them as gold mines. You need to use your imagination when viewing these houses. Try to visualize the finished product.
3. Know when “ugly” means “pass”
If the carpet has cat urine stains in the house, the subfloor or concrete base may need to be replaced. Dog urine is easier to clean. If the walls have too many cracks and bumps, you may need to hang a new stone slab or hire a professional drywall repairman. Look for signs of plumbing problems, such as water stains under sinks and loose floors.
When you are new to real estate investing, always remember your limitations. Be careful when considering houses that need structural repairs. Some rehabilitators replace walls, plumbing, structural beams, subfloors, and electrical systems, but they acquired those skills after years of experience or they hired a professional.
If you find a house with structural problems, get estimates from reliable contractors to do the job. Experience teaches you to do more over time. Until then, trust experienced contractors to make the repairs. Consider professional estimates before deciding whether or not to buy an investment property.
Why would anyone want to do this? How much does the average investor earn? In Philadelphia, real estate investors only bid on houses they hope to make $ 30,000 in. In Southern California, many investors earn between $ 50,000 and $ 100,000 for each home.
Summary: You can make a fortune fixing ugly houses. Know your market. Know when “ugly” means bad that can be good, and when stinky means pass.
Copyright (c) 2005 Jeanette J. Fisher. All rights reserved.