Ever thought about buying a fixer upper and then selling it to make a profit? If you answered yes to this question you are just like thousands of others before you. Not all of them made money, but others have made thousands. What is the difference? Why did one person make money and the other lose it?
The reason one person can make thousands on a fixer upper and one loses thousands is the way they planned it out. The person who lost thousands usually sees what they thinks is a great deal, buys it, spends $30,000 fixing it up, and then puts it back on the market for $45,000 more than they bought it for. That is great if the homes in the area are selling for that price. Now lets look at the person making thousands of dollars, they start at the price they can sell the home for! Let us say he can sell a home in an area for $250,000, he will then take that price subtract the price of closing, selling and fixing it up and add $10,000 for profit. Now let us say that is the same $45,000 the person who will lose thousands thought he would sell the home for. Now that means they cannot buy a home for more than $205,000. This will get him the price he wants when he goes to sell. The first buyer might lose money because the neighborhood prices may not be able to justify a $45,000 price increase.
Real Estate is not game for the faint at heart! It is something that if done right and with the right Real Estate agent can make you very rich. But if you don’t plan ahead and have an agent that will help you do the math beforehand, it can end up being a very costly life lesson.
Todd Clark – broker
Kastings & Associates