Whether you're just starting out or have been a real estate investor for awhile now, you've probably heard that fixer uppers are a great way to maximize your income. Although this is true for many investors, there are times when purchasing a fixer upper is not a good idea. In this article, we'll provide you with five instances when you should steer clear of foreclosures. Sound interesting? You bet.
Here are 5 scenarios when a fixer upper is NOT a good idea:
1. You do not have any starting capital. Although you can purchase a fixer upper with little or no money down, you must have some money in reserve to handle unexpected emergencies. For instance, if you underestimate that cost of the repairs and they cost more, you must have some money in reserve. In another instance, your property may not sell as quickly as you would like and you'll have to cover mortgage payments or put additional funds into finding a buyer or renter. Either way, you must have some residual funds.
2. You base your decision on purchasing a fixer upper without doing any homework. Although you can receive some hot tips from well meaning folks, including real estate agents, in most instances, you have to do your homework beforehand. This is because finding a good fixer upper deal takes hard work, effort and a lot of research. Those investors who are most successful know a bit about marketing trends, repair costs, etc. They are able to use their knowledge to maximize profits. By purchasing properties without doing any work beforehand, you increase your risk of investing failure.
3. You purchase a fixer upper in a really bad location because it is a good deal. As the saying goes, "location, location, location is extremely important in a real estate" and if you purchase a property in a bad locations, you will likely have a hard time selling or renting the property. This is because prospective buyers or renters will be afraid to live there and you in essence will not be able to offload the property at all.
4. You purchase a fixer upper that requires a lot of work and you are not a handy man and don't intend to put any money into fixing it up. Being a fixer upper realtor doesn't require that you be a master repairer, however you must make certain repairs or hire someone else in order to maximize your profits. If you don't, prospective buyers will not be interested in the property at all and definitely won't give you a great price for it.
5. You purchase a home from a seller with legal problems. In this instance, you will face a ton of problems. For instance, your seller might not even own the house because of back property taxes owed or a foreclosed on second mortgage. So, it is important that you do your due diligence to avoid these types of problems.
In conclusion, purchasing a fixer upper can be risky business is you don't know what you're doing. However, if you avoid purchasing properties in bad neighborhoods from sellers with legal properties, refuse to buy without any capital for necessary repairs, don't purchase properties you can't fix up, then you can find success in fixer upper real estate investing.
Good luck!
By Sal S Vannutini
Sal Vannutini is the author of " The 8 Power Profit Secrets To Making More Money With Less Risk In Real Estate, " a free strategy report for investors. Get your complimentary copy at http://www.FastFixerUpperProfits.com today.
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