Making Money with a Fixer-Upper

If you are looking for a way to make a little extra cash, you may be considering purchasing a “fixer upper” and then making some renovations before putting the home on the market. In the industry, purchasing a home with the intention of selling it shortly after is referred to as “flipping,” and, while flipping can certainly be profitable, there are many things you should take into consideration before you purchase a fixer-upper and start making some changes to it.

Consider the Location
No matter what you do to a home, you won’t be able to make a profit on it if you purchase a home in a bad location. In fact, fixing up the home may actually make it nicer than the other homes in the neighborhood, which will make it even harder to sell. After all, who wants to purchase a nice home that is surrounded by run down houses? So, before you invest in a fixer-upper, make certain the entire neighborhood isn’t also in need of fixing.

Watch the Expenses
Before you purchase a fixer upper, you need to determine the extent of the damages. If the home is in need of major repairs, you likely won’t be able to recoup the cost of the repairs. If the home just needs cosmetic repairs, such as a new paint job or new flooring, you may be able to invest very little for a great return. Therefore, you need to be certain to inspect the home thoroughly and to have a clear idea of how much it will cost to fix it up before you make a purchase.

Assess Your Skills
You also need to be honest with yourself about your level of skill. While painting the walls may not be a problem, you may run into problems when it comes to changing plumbing or installing cabinetry. If you cannot do it yourself, you will need to hire a professional to get the work done. This, of course, can be quite costly. Similarly, if you do the work yourself and you do it poorly, the renovations will do little to improve the value of the home. In fact, it could cause the value to depreciate further.

Think About the Customer
When making renovations to a home with the intent to sell, you always need to keep the potential buyer in mind. Therefore, while you may love the idea of converting a bedroom into an office, most homebuyers are looking for homes with plenty of bedroom space. If they decide to convert a room, they can do that later. In order to attract the largest group of buyers, however, you should focus on providing a living room area, a dining room, and as many bedrooms as possible.

About the Author: Shannon Kietzman is a well known author and trusted resource. Shannon regularly writes for http://www.electronicappraiser.com/, which is a leading provider of home appraisals that offers a nationwide personalized instant informational report about house values. For more information, please visit www.electronicappraiser.com .