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

---

Home Inspection Checklist - Home Inspectors

Although architectural details, wall and floor coverings, modern conveniences and... Read More

Understanding Title Insurance

Title to a property is a record detailing the owners... Read More

Subdividing - But NOT Land!

Many people are familiar with the concept of sub-dividing a... Read More

10 ?No Money Down? Ways to Buy Real Estate

Turn the Television on any Sunday morning and you'll find... Read More

Conditions Are Right For Buying The Higher Priced Home You?Ve Always Wanted

Higher interest rates and home prices in the past have... Read More

Stopping Home Foreclosure with Bankruptcy

Bankruptcy Will Stop Your Sale - At Least For Now... Read More

Planning for Real Estate with Estate Planning

One of the most important considerations you will need to... Read More

Is An Old Home for You? ? The Cons

So you think you might like to buy an old... Read More

Where is the Sophisticated Property Investor Putting his Money?

The Traditional FavouritesOver the last five to ten years, UK... Read More

Renting Versus Buying A Home

Renters are often in a quandary as to whether it... Read More

The Pros and Cons Of Hiring A Real Estate Lawyer

You're travelling in a foreign country and you get arrested... Read More

Grab Your Dream UK Home On The Cheap - Property Auctions

Did you know that every year thousands of UK properties... Read More

Selling Your Home - A FSBOs Guide to Keeping It Safe

Sellers need to keep their safety in mind when prospecting... Read More

Conventional Financing For Wholesale Deals

This info is very important for both new and experienced... Read More

The UK has Gone Property TV Show Crazy!

The UK has gone property TV crazy. There are now... Read More

How Real Estate Investors Use Mortgage Note To Purchase Properties

Many of you may not be aware of the various... Read More

Look Past the Bottom Line for a Propertys Potential

It's unfortunate that many real estate investors tend to look... Read More

How To Build A Million Pound Property Portfolio

Looking to quickly build a million pound property portfolio? You... Read More

Purchasing Property With No Money Down: My Personal Experience

Have you ever seen those infomercials about buying houses with... Read More

Choosing An Estate Agent

With so many estate agencies vying for your business, choosing... Read More

The Real Estate Bubble-When Will it Burst?

More and more individuals are realizing that real estate is... Read More

Achieving Positive Cash Flow from Your Real Estate Investments

Even if you're counting on rising property values to eventually... Read More

At Home In Your Overseas Home

Homeownership, in any form, is a big step for most... Read More

Finding Southern California Real Estate Foreclosure Property

Southern california real estate foreclosure:If you want to find southern... Read More

Do I Have To Buy Real Estate Through An Agent?

Sometimes when we are very busy professionals and very rich... Read More

The Real Estate Cycle

The real estate cycle, like the business cycle, refers to... Read More

Do Open Houses Work?

What are the odds that you'll find your dream at... Read More

What is a Loft Apartment?

What is a loft apartment? At the most basic level... Read More

Are Condo Hotels What the Orlando Real Estate Investor Has Been Looking For?

Earlier this year the Hawthorn suites in Lake Buena Vista... Read More

Fantasy Gap [fast money in real estate]

I was in the rental business for seven-years, made 1.3... Read More

Appraisal vs. Market Value: How to Avoid Pitfalls in the Sale of Your Home

When you sell your home, appraisers use comps (comparable market... Read More

Grab Quick Profits As Real Estate Prices Soar

Real estate values rise and fall in cycles. Currently home... Read More

Selling Your Home ? Alone or with a Broker?

How do you decide whether to sell your home (or... Read More