Buying a home that needs some work, fixing it up and selling it for a huge profit is a pipe dream that many would-be real estate investors have. It is not something to be entered into lightly – costs can often overrun and the projected profit disappears – but it is worth considering.
There are various kinds of properties that are suited to renovations which could result in a profit, including:
- Properties which have been “let go” – for example, if a home has stood empty for some years, or was rented by tenants who didn’t take good care of it, then a house can have relatively minor problems that can be inexpensively fixed. A new coat of paint, new floor coverings and window treatments could do the job.
- Properties which need modernizing. In particular, this might mean that the bathrooms and kitchen need to be completely gutted and started over with modern designs and appliances. These rooms can chew through a lot of investment money, but at the same time, can add a lot to the resale value.
- Foreclosures or other urgent sales, for example, in case of a relationship breakdown – there might be no problems at all with these properties, other than the fact that the owners need to sell quickly. If you then have a little time to wait until the market improves, combined with some minor sprucing up, you can do well out of the deal.
- Properties with serious problems – for example, they have been damaged by flooding, or have some structural problems that need correcting. If these are your areas of expertise, in particular, then you can do well out of fixing up one of these homes – but more than any others, these can need a lot more time and money invested, so be careful.