Buying a Fixer Upper – 3 Traps To Avoid

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.

Finding The Right Property In Knoxville to Invest In

If you’re starting out in real estate investing, the first thing you’ll need to do is know your market.

Where Are You Investing?

You need to know the market to know if you’re getting a deal or not. Is the area seeing a lot of sales, or are the properties lingering on the market for a long time? Even in a soft market, you can make a profit. This is because there are always sellers.

The idea is to find the motivated sellers that will really be looking to unload their house. A profit can be made in any kind of market. You just need to be prepared and know what you’re getting into from the get-go.

What Features Sell?

As I said, regardless of the market, people will be selling and buying houses. As you investigate the market, find out what features sold the property. In the case of finding the fixer-uppers, you’ll want to know about the cosmetic things, nothing structural. Making structural repairs can drastically cut into your profit. But pay attention to the types of things that attract buyers and see about incorporating them into your strategy.

Enhancements like replacing walls, plumbing, structural beams, sub-flooring, and electrical systems can certainly be done – and have been done – by investors such as you. However, the successful ones are only successful after many years of investing; it should not be done by anyone brand-new to real estate.

The bottom line: an ugly house could be your cash cow

Fixer-uppers are that way because they need work. Maybe the yard is overgrown and in disarray. Cosmetic repairs can be simple enough to do. You should embrace the garbage-filled houses, stained carpets, and nasty odors. These are all things that you can fix – and see a profit on when complete.

Real estate isn’t rocket science. The trick is to really understand the market that you operate in. Especially in today’s market where you can become unstuck very quickly. Let’s face it, anyone can make money when the market goes up. The real magic is making it when things aren’t so hot.

Which is why research is the biggest risk-minimization method you can adopt. And I ain’t talking “lazy” research either. I’m talking about getting off your butt and inspecting real houses. If you aren’t prepared to do the hard yards… don’t expect to make easy money!