Whilst savvy investors regularly make big profits with fixer uppers, there can be many hidden risks when buying a fixer upper. Learn the traps to avoid when investing in a fixer upper to increase your profits and stay away from those properties that will cause you more stress and costs than anything else.
If you can’t make a profit off of a property because of the expenses you have to pay into it you will not be making a profit at all. To stay in this business you need to make a profit on all of your investments. Getting stuck with a property that has a huge problem where you will have to shell out more money than you can make off of it is stressful, aggravating, and especially a waste of time and money.
Three Traps In Buying a Fixer Upper to Avoid
These traps often inflict the new and beginners in the field of real estate investing, but they can also hit the most experienced and skilled of investors. Everyone should be on the lookout for these three main traps and if found – stay away from them.
1. Toxic Mold: When you are looking at a newly built property you should not have to worry about toxic mold. However, since you are looking for fixer-uppers you will be mostly looking at older homes. These older homes have a risk of containing toxic mold. Many more buyers today are requesting an environmental inspection, which can reveal toxic mold if it is present in the home. Watch out for damp basements, unfinished basements, and any other wet problem.
Moisture is where toxic mold loves to grow. Before you invest in a property ask for an environmental inspection to ensure that there is no toxic mold.
2. Major Structural Repairs: Major structural repairs could be roof problems, foundation problems, old beams, and rotting wood. All of these problems could be extremely costly and could cause you to spend more money than you will make. Always make sure that you get an inspection done by a constructional professional and a home inspector to detect these problems.
3. Major Electrical Faults: Since all of the electricity is run inside a home’s walls, if there is a problem it will most likely be very costly. Major electrical faults can also be very dangerous and can come back to haunt you. You should make sure that you get a thorough and professional electrical inspection on an investment before you put any money into it.
You do not want to invest in any property that could have any one of these three problem traps. Stay away and stay safe in your investments. You can make profits in buying fixer uppers, and you can keep your business running smoothly by avoiding the risks involved in investing in these fixer uppers.