A lot of people are looking for distressed homes for sale as a profitable real estate investment, but not everyone has the wisdom to make a lucrative flip. Before you jump into a renovation, there are three things about fixer-uppers you need to know:
1. Know how to spot the right house
According to Realtor.com, one of the first sins of investing in a fixer-upper is not being able to differentiate between an ugly house and a total wreck. The site describes an ugly house as one that isn't architecturally appealing and will often be unkempt and have a foul smell. These types of houses, it explains, are cosmetically flawed, but can be easily fixed.
The total wrecks, however, have other warning signs. These include, but aren't limited to, problems with the foundation, structure, sewage, ventilation, driveway and basement, which can all be really costly to repair. Realtor.com recommends keeping a keen eye out for mold, too. Some mold issues in a property can be nearly impossible to get rid of.
When searching for the perfect fixer-upper, look at the "bones" of the house. Are the parts of the house you'd need to fix or recreate expensive? You'll probably need to pass on that one.
2. Know your budget
Setting a budget is one of the most important parts of buying a fixer-upper. In these types of investments, people tend to have eyes bigger than their wallets. While their dreams may seem achievable, it often turns out that they don't have the funds to make it happen. To avoid this, be realistic about a budget and plan it out thoroughly. Before you buy, hire a structural engineer to examine the home to help you estimate how much you'll spend. You should also create a reference sheet for these renovations costs. With this information, you'll be well-equipped to make an offer on the house.
3. Know the neighborhood
Houzz.com points out that if you're buying a house in a historic district, your design and permit processes could take longer and cost more. The historical districts often require certain materials to maintain the authenticity of the area, and adhering to these rules can make your renovations even pricier. On the upside, these costs don't come without a worthy return on investment. Homes in historic districts often translate to rising property values.
For more real estate tips in Indianapolis, contact Newkirk Realty today!