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Fixer uppers are not a new idea for making money, real estate has long been a primary investment vehicle; a wise old saying states simply “they aren’t making anymore land,” which is just a quaint way of saying purchasing land and homes is a great idea. Many people around the world have found fixer uppers. Many times when a home has fallen into disrepair, you can purchase it for a deep discount. While there is a great deal of money to be made with deals such as this there are a few things you need to keep in mind.

Location

No matter what happens with the real estate market, booms or busts one thing will always be consistent and that is location. The address of the house is more important many times than the condition, at least when it comes to determining purchase price. A good rule of thumb is to find the worst house in the best neighborhood, and not the other way around! When you purchase a home for the express purpose of reselling it for profit, you are investing in the neighborhood as well. Do your homework on the area; find out how much the homes around it have sold for recently.

Condition

Once you have located that house in a great area that needs tender loving care, and then begins the process of evaluating its condition. A few things can take potential fixer uppers and transform them into a money pit. You will want to rein in your excitement over finding a potentially profitable piece of real estate long enough to have a thorough inspection.

If you are new to the real estate business and particularly the fixer upper aspect of it, you will want to hire a qualified professional to conduct your inspection. There are three major areas that a good inspector will examine thoroughly, the roof, foundation and termites. Wiring and plumbing will run a close second to the first three areas, but with the right deal, even these can be overcome.

Foundations, roofs and termite infestation can be addressed and even fixed however; there is a point of no return with all three. Besides, even when they can be repaired this is a very strong bargaining position for you as the potential buyer.

Budget

Don’t think you are out of the woods just yet when you finish the steps above. You have just begun with your rehab and your budget still must be set. When it comes to fixing up run down property the budget figures just as importantly as all of the above. This is another reason it is a good idea to have a professional inspecting and guiding your decisions.

A budget for repairs can quickly turn into a free for all if you are not very careful. If you will be doing the work yourself you can save a significant amount of money, however many people do not have this luxury or ability. This is where a trustworthy contractor comes in handy, and they can be hard to find! Work with construction contractors that have a sterling reputation in your area, more than one investor has found their fixer uppers in worst shape after dealing with a shady contractor.

Conclusion

You can make money in real estate by working on homes that have been neglected, as long as you are careful. A good place to start on your journey is with the tips above. The economic environment may have changed somewhat in the world, however people will always need a home to live in and fixer uppers are a great way to offer decent homes at an affordable price.