For many people, the idea of investing in “fix and flip” homes sounds exciting and profitable. However, there are some things you should consider before making a purchase. In our latest post, we will discuss some pros and cons of purchasing fix and flip investments in the Chicago area!
Whether you are purchasing a fixer-upper as a quick flip or as a property you will eventually live in yourself, by buying at a discount, you can get a great deal and customize the house to your liking. Fixer-upper properties are becoming increasingly popular. Amazing deals can be found with some houses being sold at up to 80% off of retail. That said, not all fixer-uppers are created equal! There are many things you should consider before diving in. You will first need to…
Really Know What You’re Getting Into
Buying a fixer-upper requires money, patience, and the ability to maintain your composure even if you find out the place needs a new roof immediately after buying it. Needless to say, the process can be stressful! You will be responsible for scheduling inspections, processing paperwork, finding contractors, buying supplies, comparing bids, and much, much more. The process of purchasing a fixer-upper property can be stressful for anyone, especially if it’s a new venture for you! By working with professionals such as the team at Luxdoor Invest or with someone who has been through the process before, you can ensure the process will go as smoothly as possible.
Time Is Money
Talk to anyone who has successfully flipped a house and they will tell you that the faster you can resell it, the better. That said, you will need to exercise quality workmanship in addition to working quickly. Each day spent fixing up the property is costing you money. Even if you aren’t flipping it, if you can’t live in the house because there isn’t a floor, you will likely be paying to live somewhere else. The goal is to get the house liveable and rented/sold/moved into, in as quick of a timeframe as possible. The heightened timeframe is no excuse for bad work, by planning ahead you should be able to get things done quickly.
Know Your Costs, Then Add More
You should always consult a professional or team thereof when purchasing a fixer-upper property in Chicago. Not only should you talk to an inspector, but you should also seek counsel from a structural engineer. If the home as a pool, talk to a leak detection specialist. If there is a septic tank, you might hire a company to make sure everything is operating correctly. Ask around and find out what people you know have paid for similar repairs. Getting estimates is one thing, but actual costs can be quite another. This is why it is always good to have a small surplus set aside for the unexpected expenses. You might find a critical repair is needed, but you don’t have the budget for it. This could cost you big if you are forced to resell as-is, disclosing the needed repair.
Have A Plan B
It is hard to create and execute an exact plan when dealing with a fixer-upper. Things can quickly go awry, and you need to be prepared for that. Let’s say you want to flip it. If that isn’t happening, be ready to rent it out for a few months and try again. If you are planning on moving into the property, but there is a long list of fixes needed first, focus on fixing one part of the house so you can move in while fixing up the rest.