This is the second post in a two part series on buying a fixer-upper home. To read the first post, click here
We ended up buying an undervalued home in a desirable area, fixed it up ourselves, and sold it a year and a half later for a sizable profit. The key here is to pick a house with great “bones,” but perhaps needs a new paint job, new carpeting or hardwood floors, or new landscaping. Generally speaking, you want to stay away from houses that have major infrastructural problems, like foundation, roof, or retaining wall issues.
The more things you can do yourself in the way of cosmetic repairs, the more profit you’ll walk away with when you sell. The main things that our home required were a new paint job inside and out, new landscaping, kitchen cabinet updating and repainting, new granite kitchen countertops, and new hardwood floors. The only renovation work we didn’t choose to do ourselves was installing the granite countertops.
This strategy isn’t for everyone, as most people understandably want a move-in ready home, but this presents a great opportunity for people who are patient enough to deal with hassle of living in a house while they renovate it. Usually, you can get a nice discount on the purchase price of a fixer, effectively enabling you to make money going into the deal. In other words, you’re buying it an undervalued price because of the work that it needs, so you’re making a profit before you even sell it. The majority of most Americans’ net worth is in their home, so this is simply a way to more aggressively tap into and leverage that money.
If you repeat this process every few years, buying a better and better home each time, the wealth generating potential is pretty impressive. Eventually, you could find yourself in the enviable position of being able to buy your dream home, simply by using the profits you’ve earned from flipping your homes over the years.
Sure, this process requires some extra work, in the form of either a little elbow grease on your part, or hiring some reasonably priced labor to help you out, but the advantages can be well worth it.
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