In a real estate industry, perhaps one of the popular ways of cashing in is through fixer-upper. For first timers, fixer-upper is not an illegal activity so nothing to worry about. The term is a just a real estate slang which according to biggerpockets describes a property or "home that needs either minor or significant rehabilitation before it can be used for its intended purpose." And in most cases, the main intention is for raising the property's potential value to get a satisfactory return on investment.
From the given definition, one might assume that such process is a plain and simple way of cashing in. However, aside from finding certain property on sale, there are other things to be considered in connection to the property itself and its future use for you as its buyer. If you are really convinced to buy a fixer-upper property, then you might want first to ask yourself before taking any drastic steps. Generally you would have to look at certain areas of a fixer-upper property which includes but limited to structure, foundation and membrane, electrical and plumbing, ventilation, doors and windows. But above the aesthetics you would have to consider the pros and cons of your move.
Pros of Buying a Fixer-Upper
Less competition
In choosing a fixer-upper home you will be assured that there would be less competition in the market compared to a home that is move-in ready. For most buyers would rather pay a higher amount than be entangled with the issues which may need further renovation or fixing.
Forced Appreciation
The good thing about fixer-upper property is that the long wait for property appreciation may be shortened. In plain words due to the rehab made on a fixer-upper property its market value automatically surged up without the long wait.
Cons of Buying a Fixer-Upper
Hidden Expenses
Though you might have bought the fixer-property at a low price, there might still be some hidden expenses which you were not able to discover upon your first inspection. As you continue the rehab, you might see that the roof for example needs more fixing or some electrical wiring need to be replaced. Having an accurate estimate of the total cost would really be difficult to determine especially if you're new into purchasing a fixer-upper property.
Stress
Obviously, the more you discover the negative side of the newly purchased property and as you move further with your rehab expect that stress would build up along the way. Rehabbing can be very stressful, and for this reason some would prefer to buy a new house than a fixer-upper property.
Those are some of the pros and cons of buying a fixer-upper property as it was also discussed in biggerpockets. There are other things that were not mentioned in the article, feel free to add some of your ideas and comment below.
