Let’s suppose you have prepared for a year and the time has come to start your house building adventure full time. You could start right in and build a whole house from scratch. In fact you may have thought that is what I was going to suggest when I started all this. Not necessarily so. There are a number of alternatives that might suit you better as a starter project. So, let’s skip right over building from the ground up and talk about another way which I am not fond of but is worth exploring.
Taking on a fixer-upper can be profitable IF…and there are a number of them.
IF you can get one for a low price.
IF it is in a good location where it will sell when finished.
IF the fixing up part of the deal is within your skill set.
IF the costs of rehabbing it are within a realistic budget.
IF there are no surprises when you start repairs. Usually there are.
IF you treat the place as a business and don’t fall in love with it.
There are advantages to a Fixer. You could move right in, saving the rent and utilities of living elsewhere. Camping out in your fixer-upper means having lots more hours per day to work, shortening the time needed to finish the project. You are not there to enjoy the comforts of home; you are there to work. Pretend it’s sort of a combat mission.
Fixing up an existing house means you could do your project anywhere. New Orleans and the Gulf coast is Fixer-Upper Paradise right now.
Working on an existing home means you will be learning by repairing rather than learning by constructing. That is a big difference early in your career and you will learn more than you can imagine. Hopefully you will find a place with better potential than the picture above portrays.
The large number of foreclosures coming on unfortunately means homes will be left unoccupied. Many of them will suffer damage from vandalism or weather and from not being maintained. This puts you in a good position to buy an abandoned home at a low price.
During the last downturn in our local economy, back in about 1996, we looked at an empty home owned by a bank. It had not sold at auction and was in pretty rough shape with broken windows, water damage and overgrown landscaping. We could have gotten it for about $45,000. It was assessed at $135,000. Someone else bought it and a couple years ago it was assessed at $220,000.
The key to getting the best deal on a Fixer is to buy the worst house in a good neighborhood. Unfortunately for some but lucky for you, opportunities like this exist now and there will be more of them in the near future than at any time in many years – IF you are prepared.
I know that people who are good at doing things think anyone could do them if they really wanted to. Building a house from scratch is one of those “things.” A fixer-upper may be the transition project that makes you a good builder.
Next time, I’ll have another transition idea for you.