Fixer-Upper Foreclosures

Some observations in buying fixer upper properties

Start with residential properties rather than commercial and industrial properties in the beginning

Everybody needs a home. The residential market is more stable and expanding.

  • There are no bad times for fixer-upper homes. If the economy is in a recession, you may catch good deals. Many investors make more profits in bad times.
  • Home prices are lower/depressed. Look for low cost at buying.
  • Interest rates are lower. Look for low-interest Government and conventional loans
  • Your fixer upper is collateral, so you can easily borrow on real estate. You can use “other people’s money” easily.
  • Real estate makes you look rich, because you have your property on the “assets” side of the balance sheet.
  • Start with low-cost fixer-upper to gain experience and move on to higher priced properties. Learn from your mistakes in fixing and underestimating expenses (overestimating doesn’t hurt that much!).
  • Positive cash flow is most important, so, if a higher value fixer-upper looks promising, go for it!

Advantages of fixer-upper properties

Your options:

  • Do it completely by yourself (finance it + fix it up + keep all the profits).
  • Do it with a partner (finance it + fix it up + share the profits).
  • Work with the seller (seller financing + fix it by yourself or together + share the profits).
  • Buy the fixer-upper property on your own, have others fix it up, and enjoy all the profits.
  • Sign a contract and sell (assign) the property to another investor.

In the beginning: Concentrate on those fixer-upper properties that you can handle on your own. Do your own “Do-it-Yourself” (DIY) home inspection before your purchase and accompany the home inspector to make sure that property does not have a structural or serious problem.

Later: As you get to know people who can fix plumbing and electrical problems, then, buy fixer-upper properties having similar problems. You can make more profit.

More on buying fixer-upper foreclosures…