Investing in a Fixer-Upper: Is it a Future Dream Home or a Nightmare?
Investing in a Cape Coral property listed as a "fixer upper" has the potential to go one of two pretty obvious ways. Of course, we all envision that steal of a deal, in need of only minor cosmetic repairs, that turns out to be the investment decision of a lifetime. That could happen. Another possible scenario is the home that turns into a series of unexpected disasters that drains your finances and turns into a complete nightmare.
Now, don't get scared off. There certainly are excellent deals to be found for the individual who isn't afraid of rolling up his sleeves, and a fixer-upper has several potential advantages:
- Less competition for the home
- Lower sales price
Resale profit potential
Here in Cape Coral, there is still an inventory of homes that have gone through foreclosure. Some of them that have been sitting vacant may need nothing more than a few minor repairs, a fresh coat of paint and a good cleaning. Purchasing a fixer-upper, if done correctly, can turn out to be a pretty sweet deal, if you know what you are doing. Let's break it down:
Realistically Assessing the Potential of a Fixer-Upper
Regardless of the condition of the Cape Coral property you are considering, there are still the basics that should be taken into consideration when assessing the home's potential future worth. These are the 'unchangeable' facts that will either increase or decrease the value of your home, regardless of the repairs or renovations.
- Location - The house may be in disrepair, but how's the location? Cape Coral waterfront property, pool homes, or property located in a golf course community are going to fair much better than a home that sits next door to a fenced retention pond. Sounds like a no-brainer, but be sure to check the property values of other homes in the neighborhood to determine the potential value of your own.
Footage and Age - Regardless of the present condition of the home,
realistically look at the layout, the square footage, and take into
consideration the age of the home. An older home is likely to need work not
visible just from a walk through and if the home is tight on space (under 1,200
sf) it may not be worth the effort you will be putting into the cosmetics.
Break Out the Calculator
Once you've looked at the 'unchangeable' factors and decided this Cape Coral home might be the deal for you, it's time to do the math. This is where you need to be unforgiving and very realistic to avoid getting yourself in trouble. What one person may advertise as 'home in need of a little TLC' can become a nightmarish disaster to the person who doesn't realize what they are getting into. Learn to tell the difference between low budget, quick repairs and major overhauls.
Repairs that will add value to your Cape Coral home and shouldn't be much of a hassle or overly costly include:
- Patching walls and painting the interior and exterior
- Laying new flooring, tile or carpeting
- Replacing worn baseboards and trim
- Installing light fixtures and ceiling fans
- Replacing windows and doors
- Installing new toilets and bathroom sinks
- Refacing, painting, or installing new kitchen cabinets
Installing new kitchen appliances
Not-so Easy Repairs
The following repairs should be looked at as potential red flags. They are more costly and can also be signs of additional potential problems.
- Reroofing (Can be a sign of potential water damage in the home)
- Replacing plumbing (Why does it need to be replaced? Is there water damage within the walls?)
- Electrical work (Electrical work is one of those repairs that can be very costly, but will not raise the value of the home, since it is an 'invisible' or unseen repair)
- Adding on a garage, lanai, or pool
Complete gutting of kitchen or bathroom remodel
Inspections are a Must
Always have a thorough home inspection before making any offers on a fixer-upper. At best, a home inspection gives you the assurance that the Cape Coral property you are interested in is a good investment, or it can provide you with necessary documentation that can help you negotiate an even better selling price. At worst, a home inspection can help you back out of a potentially disastrous situation.
The bottom line here? Pick projects that pay. When looking for the perfect Cape Coral property investment, a fixer-upper may truly be a diamond in the rough, but only if the repairs are mostly cosmetic.
We hope this article has been helpful to you. Check us out next week when we'll be covering 'fixer upper home loans.'
By David Sporleder | Sporleder-Ray Realty Group | firstname.lastname@example.org| Google+