When you're just starting out as a real estate investor, you'll want to look for ugly houses that are in need of mostly cosmetic work to turn them from doghouses to dollhouses. You'll be looking for entry-level houses that only need some TLC, including clean-up, interior and exterior paint, and perhaps some new carpet.
It helps if you're somewhat handy yourself so you can do as much of the fix-up as possible, but whenever you're considering the purchase of a fixer, make sure to make an honest assessment of your limitations and to use caution when a home looks as if it will require structural repair. If you don't feel comfortable tackling certain types of repairs yourself, it will be worthwhile to form an alliance with one or more subcontractors who'll either do the work for a reasonable price or will work for a share of the proceeds once the house has been resold.
If you encounter a house with structural problems, never make any assumptions before you get estimates from reliable contractors. As time goes by, you'll gain more experience in how to do some of the less critical repairs but especially at first, put your trust in the expertise of experienced professionals. Once all of their estimates are in, you can take them into account before making an offer on a property that has structural problems.
Once you get your team together and have successfully renovated and resold several investment houses, you'll begin to feel more confident when bidding on houses that will require more repairs than the average real estate investor feels comfortable doing. That can be a real advantage when looking for homes to turn over, because not only will there be less competition but you'll also be able to negotiate a lower price by using the cost of repairs as a bargaining chip.
Being able to tackle some structural problems will open a greater market and will allow you to buy homes other investors would ignore. This can be especially profitable if the problem house happens to be in a very desirable neighborhood, because you'll have the potential to get back a greater amount for each dollar you spend when fixing the house up for resale.
When you're first beginning to look for investment houses to fix and sell, it will be wise to be one of those timid investors we've just been talking about. After all, you won't have the time, money, expertise, or support network to be able to tackle the more difficult houses at first, and you won't be able to afford to make a big mistake. However, after having fixed a few properties, your confidence level will grow, along with your support network, and then you can move up to the next level of fix-up.
Until then, remember that bad can be good when it comes to real estate investing, as long as it's not too bad!
Copyright © 2006 Jeanette J. Fisher