How to Find a Fixer-Upper

Whether you’re thinking about flipping a house to potentially make a profit or considering a fixer-upper due to a tight budget, you’ll want to be sure that the challenge is something you can take on to avoid getting into a housing nightmare or coming out at the losing end financially. About two-thirds of millennials said they’d be willing to put an offer on a home in need of major repairs, according to a 2019 survey, but the best scenario is to find one needing mostly minor repairs rather than major ones, and that is priced below market values. 

If your goal is to purchase any asset with the intention of selling, including a house, that is called speculating and not investing, meaning it’s a gamble. The steps to buy a house that’s a fixer-upper are similar, but you’ll need to keep in mind that if you have to take out a home loan, lenders will consider it to be more of a higher risk, which means higher interests rates and higher closing costs.

Once you’ve made the decision to purchase, whether using cash or obtaining a home loan, these are some of the best ways to find that perfect fixer-upper. 

First Determine How Much You Can Truly Afford to Spend

Before you start looking for that home, you’ll need to know how much money you can spend not only on the price tag of the house itself but how much on the repairs/remodel. Set a budget to ensure you don’t end up in over your head. That means you’ll need to make sure the price is right while including anticipated expenses. For example, if you’re looking at a home requiring major renovations estimated to be $300,000 and the average home in that neighborhood is selling for $500,000, you’ll want to spend well under $200,000, otherwise, you’ll be losing money if you plan to resell.

Drive Around

One of the best ways to find fixer-uppers is to simply get in the car and drive around various neighborhoods. If you see any homes with neglected exteriors, such as warped siding, an overgrown lawn, fence falling apart, etc., chances are the interior needs some work too.

Search Listings Online

Sometimes realtors will note in their online ads that a home is a fixer-upper, or it may be labeled “short sale.” That means it is worth searching through online listings too. You may also want to look for homes that have been on the market for a few months or more in a community where most homes are selling quickly. Another clue is that if a home seems underpriced, odds are that figure is due to the shape that it’s in. 

Foreclosure Auctions

Foreclosure options are great for purchasing fixer-uppers at a big discount, but the downside is that you’ll probably have to pay in cash, so you’ll have to have enough money available to do so. The other problem is that you won’t be able to tour it first to determine how bad it really looks, which means you’ll need to be extra cautious.