Fixer-upper homes are great investment opportunities for real estate investors, especially those who’ve been in the business for several years and already know a lot of contractors. These properties can be bought below market price and sold at a high ARV or after-repair value.
To find a fixer-upper house, a real estate investor can either buy leads from Property Leads, drive for dollars, go to auctions, search foreclosures and short sales, search the Multiple Listing Service (MLS), visit bank and lender websites, check tax records, and connect with an experienced agent.
If you want to flip fixer-uppers but don’t know where to start, congratulations on finding this blog! Here, you’ll learn what to look for when buying fixer-uppers, how to find fixer-upper homes, and how to negotiate when buying fixer-upper houses.
A fixer-upper is a property that is sold below market value because it needs a lot of work. Although most fixer-uppers are still livable, it isn’t comfortable to live in and the repairs and renovations needed are almost always too expensive for the homeowner.
Fixer-upper houses are great opportunities for real estate investors, especially expert flippers. They’ll be able to buy the house for cheap and sell it for a much higher price after repairs. Note, however, that flipping fixer-uppers are not for every investor. You must first have a thorough understanding of damages on a property and its costs so you can get good profit in the end.
Fixer-upper homes are often preferred by investors not only for their reduced price and the profit they’ll get but also for the customizable improvements they can make, the so-called “old home charm,” and possible tax abatement.
Not all fixer uppers are equal. Before looking for answers on where to find fixer upper houses, you must first learn about several factors you should look into when buying a fixer-upper home. These are home condition, location, updates needed, and size and layout
Make sure the fixer-upper house doesn’t have any major structural damage that would entail a large renovation budget. Opt for fixer-uppers with only minor cosmetic issues that you need to repair. This way, you won’t need to spend months working on just one project.
Bring a licensed home inspector with you to ensure that the house is the right property, in other words, it still has a strong foundation, proper plumbing, up-to-code electrical wiring, and solid roof condition (has roof certification).
It is ideal to buy a fixer-upper in a progressive location or neighborhood since it will dictate the appreciation and resale value of the property. Make sure that it is near schools, hospitals, malls, and other establishments that are essential.
Also, how much you’ll spend on the repairs will also depend on how much the materials are sold in that particular location. Not to mention, you should also sell based on comparable homes.
If possible, prioritize houses or older homes with repairs that would not require significant renovation costs on your end and has a lower purchase price to save you the financial trouble. For example, it doesn't need a new roof or flooring.
These are typically cosmetic fixes like outdated or peeling interior and exterior paint, old-looking kitchen cabinets, dated bathroom tiles and fixtures, tile or laminate countertops, outdated or broken appliances, tarnished carpet, trash or leftover items that need to be removed, unkempt landscaping, and house that doesn’t need refinishing on its hardwood flooring.
You can rearrange the layout in a fixer-upper, but be aware of any design or layouts that would require you to knock down load-bearing walls. This can be really expensive and time-consuming.
Moreover, if you wish to increase square footage, you still have to look into local construction zone regulations as this will affect the cost and legality of the changes you will be making. Do your due diligence so you don't face any legal issues like most homebuyers.
Now that we’ve already covered what you should look for in buying a house to flip, we'll teach you how to find fixer-upper homes. Here are 9 places and tips on how to find fixer-uppers to flip.
If you have no idea how to find a fixer-upper targeted marketing, your best option is to buy leads on a fixer-upper home from Property Leads. All the leads from this platform are all vetted and exclusively sold so you have less to no competition.
What’s more, Property Leads generate their leads from search engine optimization (SEO) so they are all extremely motivated to sell.
Never underestimate what a simple drive around to your target neighborhood can do. Driving for dollars can help you identify investment properties in your neighborhood that aren’t listed on the MLS. Through this strategy, you get the first dibs on the perfect fixer-upper giving you a higher chance of getting a deal.
When doing this strategy, you can use driving-for-dollar apps so you can pull property information while on the road.
Some telltale signs of a fixer-upper are uncollected newspapers, dirty lawn, peeling paint, etc.
Many properties that are being foreclosed are actually fixer-uppers. In most cases, the homeowners have already stopped living in the property making it unkempt and not that livable (check owner occupancy status).
Since the homeowners of houses in pre-foreclosures don’t want to lose their home to the bank, they would be willing to sell below the real estate market price to at least recoup their down payment for the property. Buying fixer upper foreclosure properties is a great way to earn high profits.
Properties that are underwater are often sold on a short sale. Similar to houses in pre-foreclosure, homeowners prefer short sales rather than losing their property completely to foreclosures. This means they are willing to sell below market value, too. You can connect to banks directly to identify homeowners who are letting go of their property through a short sale.
Foreclosure auctions take place when a homeowner fails to pay what they owe in the mortgage. The bank takes ownership of the property and stages an auction so interested buyers can bid on the property. Usually, these auctions are advertised in the local newspaper. You might want to attend these foreclosure auctions to check for a fixer-upper that the bank is willing to sell for cheap.
Note, however, that your chances of finding fixer-upper homes below market are kinda low because of the bidding system.
The MLS or Multiple Listing Service is a platform where homeowners post their houses for sale. However, this can only be accessed by a licensed real estate agent.
To search for fixer-uppers in the MLS, you might want to partner with a real estate agent. They can help you gain access to the MLS for a fee. If this doesn’t work for you, you can also check out other services that pull data from the MLS.
You may also want to visit the websites of banks and mortgage lenders to find fixer-upper properties. Remember that the lender has the right to take possession of a foreclosed home in order to recoup their losses.
They sell the house for a fair price when they auction properties, but in case the bidding doesn’t go well or no one shows up, the house remains in their possession and they post it on their website. Aside from bank and lender sites, you may also want to check real estate investor websites.
A homeowner having financial problems might have issues paying their property taxes and the carrying costs of their house. That said, you can search the website of your local government for any tax information that is available to the general public. Most buyers like you access this all the time. You can also find your local tax assessor's website online and search their database of records for people with delinquent taxes.
Before the house of these people with delinquent taxes gets under the control of their mortgage lender, make a direct offer to the homeowner. Chances are, the sale would be fast and hassle-free.
Real estate agents are always working on selling fixer-uppers in the real estate community. But in some cases, no matter what strategy they do, some fixer-uppers don’t really sell. This is where you enter the equation.
If you have an established relationship with real estate agents in certain areas, they’ll automatically contact you if they know of investment properties that aren’t selling on the local market. Of course, they may ask for a commission fee for this. Despite the fee, you will be able to close more house deals with their help.
Without the right buying process, a fixer-upper deal won’t be a profitable sale. More than checking the damage to properties, buyers or real estate investors should also estimate the cost of repairs, obtain permits, etc. before submitting an offer. We’ve detailed the whole process below.
Depending on the size of the fixer-upper and its location, a thorough inspection might cost you between $250 and $700. Moreover, you may also want to have customized inspections for certain problem areas. Check the house for pests, lead-based paint, issues on sewer lines, etc.
Before making an offer to the seller, you can also ask a structural expert to inspect the stability of the property.
The home inspector you’ll hire can give you a ballpark figure for how much it would cost to fix any issues discovered during the inspection.
But if you want a precise estimate before the sale, it's advisable to seek the opinion of a contractor. Whatever estimate they give you, add 10% to it because there may be some issues they’ll discover while working. Be sure to check client reviews before settling for a contractor.
Which house improvements require permits will actually depend on where the property is located. But most probably, you would need to get a permit for room addition, structural work, installation of windows and fences, electricity and plumbing work, and installation of garages and sheds.
To get a permit, go to your local government office or visit their online portal. You may need to provide detailed plans for the property, too.
To save money, identify beforehand all the repairs that you can do with the help of friends or family members. Don’t ask the contractor to repair everything especially minor cosmetic fixes because you can actually save lots of money from DIY-ing them.
For example, peeling paint and repainting a bedroom. Contractors usually charge too much for this when the work can be done for cheap.
You have a lot of financing options if you plan to flip a property. In fact, you have more options than a typical homeowner buying a primary residence. Two of these financing options are the Federal Housing Administration (FHA) 203(k) rehabilitation loan or a Fannie Mae HomeStyle Renovation Mortgage.
Check your eligibility for these loans, and as much as possible, stay away from hard money lenders who don’t have a good reputation.
When making an offer for a fixer-upper, make sure you include contingencies. These are exclusions that permit you to cancel the purchase of the property if something arises like a huge structural problem.
Moreover, negotiate well so you don’t pay too much for a fixer-upper. Just make a reasonable offer that takes into account the cost of all the required repairs.
Finding fixer-upper homes becomes relatively easier compared to finding other investment properties through the tips and sources we shared above. Just remember to do a thorough inspection of the property and estimate costs with the help of a contractor to ensure that it will be profitable for you.
Ultimately, the best and fastest way to find fixer-uppers is to buy leads from Property Leads. Our fixer-upper leads are generated through SEO and we sell them exclusively, guaranteeing you less to zero competition!
To get your first fixer-upper leads from us, fill out our form below.
30 N Gould St Ste N
Sheridan, WY 82801
(207) 309-3949
sales@propertyleads.com
