Do You REALLY Want to Buy a Fixer?
Sweat equity is a GREAT thing. Buy a cheap house and fix it up and WALA! Instant equity! Sounds great?
News Alert!
GREAT does not equal EASY
If it was easy everybody would be doing it. There are some very cheap 
houses out there. In fact just the first 6 weeks of 2011 saw the closing of 14 homes under $50,000 in Lake Orion, Oxfordand Clarkston. All but 1 have at least 3 bedrooms and the one 2 bedroom home was a lakefront. All were fixers. And 12 of the 14 sold for CASH. No mortgage. No land contract. Cash.
There are 3 things you need for a successful outcome when it comes to buying a fixer:
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Talent
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Time
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CASH
Not all fixers need to sell cash, but the cheaper they are the less likely they will be able to mortgage. There are loans to accommodate the fixer, but you will need to use a licensed builder- now you’re paying for someone else’s sweat and there’s no profit in that. Even if a house is mortgageable with conventional financing and is just a fixer to a lesser degree than the 12 cash sales I mentioned above, you will still need cash to do the repairs.
I’m not saying that nobody should buy a fixer; I’m just saying you should think long and hard before rushing in and taking on a job you may not be prepared for. Some questions you should ask yourself:
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What are my skills? Carpenter skills, plumbing skills, electrical skills, drywall skills…
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How much cash will I have after the closing?
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How much time will I have to devote to working on the house?
After you honestly answer these questions you can assess if a fixer is right for you, and if it is to what degree. Carpet and paint is not a fixer- that’s just a cosmetically challenged house. The need for a roof 5 or 6 years out is not a fixer- that’s maintenance and part of home ownership. Houses aren’t perfect and most won’t be decorated to your taste. There will always be small things a house can use once it’s your home. When I say fixer I’m talking about a house that has non cosmetic NEEDS that should be addressed immediately.
photo courtesy freephotosbank
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