'Fixer-Upper' is explained in detail and with examples in the Real Estate edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.
Fixer-Upper is a term that is commonly associated with real estate property, such as houses, that need some significant repair and renovation work. Although these kinds of houses might be lived in despite their present condition, they usually want redesign, reconstruction, or redecoration of some form. Depending on how much repair or renovation work they require, fixer-upper’s can be major projects that require significant investments of time and money.
Fixer-Upper’s commonly result from houses that have not been taken care of or properly maintained. Because of this, they tend to possess market values that are lower than comparable houses found in the same locale. Fixer-Upper’s can be discovered in the majority of communities, even in neighborhoods whose housing prices are not depressed.
Fixer-Upper’s commonly prove to be very popular with buyers who act as investors in houses. They want to acquire the property cheaply so that they can repair it and increase its likely real estate value in order to acquire a nice profit on the investment. These projects as investments have gained greatly in popularity as a result of various do it yourself types of renovation shows that are all about home improvement. Many times in downturns in the real estate market, such as the one that has been ongoing since 2007, the interest in fixer-upper’s declines.
There is a danger with Fixer-upper’s for many buyers who think to improve and then flip them, or resell the house for profits. This is simply that they do not realize how much time and money will be required of them in repairing the house in question. Making a house salable will require addressing not only relatively simple cosmetic issues, but also potentially structural or service problems. When the plumbing or foundation is in need of major repairs or replacing, the work involved commonly turns out to be very expensive and needs professional contractors.
This is why determining if a Fixer-upper is a viable and worthy investment requires some experience and work. First, you will have to determine for how much the typical house in the neighborhood is selling. It is also wise to know what makes the most desirable houses in the neighborhood so in demand and how much they cost. Real estate agents can be helpful in this respect.
If you decide to pursue buying a Fixer-upper, then you should be watching for the truly cosmetic Fixer-upper’s. These only require more basic improvements such as wallpaper, paint, new appliances, some landscape work, and possibly new window and floor coverings. Houses that look run down and require substantial structural repairs can be very dangerous and should be avoided. Houses that are priced too reasonably usually have a reason for this. Intelligent buyers should learn why this is the case before they commit their money.
The best strategy is to find the house that is the least wanted in the best neighborhood possible. The house and estimated repair cost must both be within your budget. Once at full fair market value, such a property should pay you back handsomely.