Fixer Uppers: Dont Make This Mistake

Making money with "fixer-uppers" isn't about repairing drywall or planting flowers. It's about using the right approach from the start.

A Big Real Estate Mistake

Many people buy and sell a fixer-upper like this: They buy a house, fix it up, then add some amount (say $10,000) that's in their head onto their costs. Then they put the house up for sale for this price. This is so wrong.

Would you buy a house according to what the seller has into it? Of course not. You look at what similar houses are selling for to determine the value. So if you have $110,000 into a fixer-upper and similar homes are selling for $105,000, how much can you get? It doesn't have anything to do with what you've spent, does it?

The Fixer-Upper Formula

1. Determine how much the house wil sell for when you're done fixing it up. Ask an appraiser for help, or look at what similar houses have sold for (not list prices). What it's likely to sell for is the only meaningful definition of value when dealing with fixer-uppers.

2. Calculate all costs: buying costs, including closing, fees, etc.; repair costs; carrying costs, including interest on loans used to buy the house, property taxes, insurance; selling costs, including commissions, fees, title policy, etc. Subtract costs from the expected sales price.

3. Now subtract a profit that makes it all worth the effort. This gives you the highest price you can pay for the house. Walk away if you can't get it for this price or less. Offer several thousand less, of course, to give yourself negotiating room.

An Example:

You find a fixer-upper, and determine you can get $98,000 for it when it's done. The expenses of buying will be $2,000. You get repair estimates of $8,000. Carrying costs will be $2,500. The sales commission will be $6,500. Other closing costs will be around $1,500. You figure $1,500 for "unexpected" costs. Finally, you want $10,000 for your effort.

Subtracting all of that from your expected sales price leaves $66,000. This is the most you can pay, if you want a safe real estate investment. You offer $61,000, and walk away if you and the seller can't settle on something under $66,000.

Always start at the end (the eventual sales price) and work your way back. This is the right way to safely invest in fixer-uppers.

Steve Gillman has invested in mobile homes and other real estate for years. To learn more, and to see a photo of a beautiful house (not a mobile) he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com

---

Things To Consider Before Buying a Condo Hotel or Resort Residence

Resort home ownership, such as condo hotels and fractional shares... Read More

Real Estate Investment Requires A Team

I had a hard time at first with real estate... Read More

How Long Your Mortgage Runs Determines How Much You Pay

The first thing most of us think about when the... Read More

Real Estate Investing and Home Ownership

If you already own your home, you will probably make... Read More

What To Expect In Closing Costs On A Home Purchase

Many are taking advantage of this year's low mortgage rates... Read More

A $100,000+ Discount On Miami Condos

By this point and time, many people have heard about... Read More

Real Estate Investing - The Dream House Effect

Several years ago I developed a philosophy in renovating houses... Read More

Buyers Closing Cost

Buyers, borrower, closing costs can be divided into two categories.... Read More

Budgeting Your Log Home: Where Do You Start?

The Log home industry has matured these last many years,... Read More

Odors Can Make or Break The Sale of Your Home

It's amazing how important the sense of smell is to... Read More

11 Steps Away From Buying a Home

There is no doubt that the market for houses has... Read More

Buying and Selling Real Estate: Negotiating to Win-Win

You don't get what you deserve - you get what... Read More

Questions Investors Should Ask When Buying and Selling Investment Property

If you're a real estate investor, here are several questions... Read More

Preparing To Make A Zero Down Offer

I'm going to focus... Read More

Investment Real Estate -- A New Twist: Be the Bank, Not the Landlord, and Get Rich Without the Work!

I was a landlord for a decade, and I believe... Read More

Choosing a Reputable Real Estate Appraiser

When you are considering purchasing a property; either for investment... Read More

Reinventing Real Estate, Part 2: Online and Empowered Consumers Are Taking Charge and Paying Less

Demanding consumers"Internet buyers tend to be better informed on market... Read More

Estate Planning

Estate planning can enable you to control your property while... Read More

Sell Your California Home For Top Dollar

HOW TO SELL YOUR HOME FOR TOP DOLLAR1. Make your... Read More

Should Sellers Order a Pre-sale Home Inspection?

One of the main reasons home sale transactions fall apart... Read More

Lake Havasu Real Estate

Lake Havasu real estate is a hot commodity. With surrounding... Read More

Real Estate Investing In Bulgaria

As Bulgaria readies for joining the European Economic Community in... Read More

How to Make Money from the California Real Estate Gold Rush

What do the Californians know that we don't?What is so... Read More

Why it is Important to Hire Just One Real Estate Agent to Buy a Home

In our fast paced and frantic real estate market, buying... Read More

5 Things to Look for in a Property Appraiser

Homeowners who are seeking a property appraiser often ask "How... Read More

Saving for a Home

So you want to buy a home? This is a... Read More

How to Use Color Psychology to Prepare Your Home for a Top-Dollar Sale (Part 1)

You've decided to prepare your home for sale. Whether you... Read More

Give Your Home A Timeless Feel

In the world of real estate, there is a huge... Read More

The Person With The Most Money Wins!

More money can mean better:- Health Care - Relaxing... Read More

10 Tips to Sell Your House Faster!

Here are some Handy wee Tips to help you Sell... Read More

The Real Estate Agent Alphabet

Alphabet Letters after a person's name seem to bestow some... Read More

Real Estate Internet Marketing Is The Way To Go

Real estate Internet marketing is a booming business, along with... Read More

How to Negotiate a Successful Short Sale

Anyone who has ever profited from doing a short sale... Read More