Home buyers in the market for a sound investment opportunity often settle for a fixer-upper property with dreams of turning their new purchase into a gold mine. While a wise purchase can provide a steady rental income in the long run, there are certain disadvantages you should be aware of before you buy a fixer-upper.
Have You Bitten Off More Than You Can Chew?
A common mistake that fixer-upper buyers face is purchasing a property that will require so much repair work that it will cost a lot more to fix the property than it is actually worth.
Before you settle for a fixer-upper property that you have your eye on, you should have the home inspected and receive quotes on how much it will cost to repair the damages. Properties that are structurally unsound with ceilings that are caving in, extensive water damage throughout and mould can be more trouble than they are really worth.
Lack of Return on Investment
Buyers who purchase a fixer-upper property with the intention of flipping the property once it has been repaired do not always end up with a great return on their initial investment. Look into all the costs that will be involved in repairing the property before you actually purchase the fixer-upper and then start crunching numbers to see if the purchase will actually be worth it.
Buying a Fixer-upper in a Bad Neighbourhood
Fixer-upper properties can be found in some of the best, as well as the worst, neighbourhoods in town. Fixer-upper buyers who buy a property without first investigating the surrounding area may find out later on that their purchase was not such a great choice after all. Before you buy a fixer-upper, do not just look at the actual property.
Investigate the surrounding neighbourhood during different times of day on weekdays and weekends. Are there any good schools nearby? Are there any easily accessible amenities? Does the area seem safe during the day and night? Is there a noticeable drug or gang presence? If you buy a fixer-upper in a crime-ridden neighbourhood, it will be challenging to rent out your property to the right people.
If the seller is only prepared to sell the property “as is” with no inspection, you should avoid purchasing the property, as the seller could be trying to conceal major structural flaws that you have not seen during the initial and final walk through.
A fixer-upper property can be a good investment opportunity, but it can also turn into a nightmare purchase if you do not thoroughly look into what you are getting into. Fixer-uppers should always be inspected to give you an idea of how much it will cost to repair the property. Another trap that fixer-upper buyers fall into is purchasing a property in the wrong neighbourhood.