The Difference Between Buying A Profitable Fixer Upper or A Money Trap

One of the basic rules of real estate is to buy the cheapest home on the block, fix it up and reap the profits. When using this strategy, you have to be careful to make sure you buy the fixer upper instead of the money trap.

Location is the primary rule in real estate. Once you find a good location, however, picking the target home for your offer can be a bit more difficult. When we make the decision to buy something, we usually want something nice for our money. This leads people to buy the nicest home on the block. In truth, you want to buy the cheapest home. Most people, however, do not realize why.

When playing the real estate game, it is vital that you keep in mind that part of the process is about business. Ultimately, you want to make a profit. To do that, you need to maximize the profit by buying the cheapest home on the block that can be fixed up with a minimum of cost. With a relatively small expenditure, you can generate heaps of wealth in the form of equity gains.

The goal is to buy the cheapest home on the block that has CURABLE defects. Usually, this boils down to cosmetic issues with the home. The landscaping may consist of a dead lawn surrounding by swaths of weeds. The exterior walls of the home may not have been painted since the home was new. For a nominal amount of money, you can fix these problems and bring the home up to the standards of the other homes in the market.

On the other hand, there is the money trap real estate investment. This is the home that has just seen to much action. The problems are not curable with a nominal investment or amount of effort. The home may have a foundation problem. It may be positioned just right so as to catch the flavorful fumes from the local sewage treatment facility. Whatever the issue, avoid this home. You are buying an incurable problem and nothing more. Be disciplined or you will lose you hat, shirt, pants and anything else you own.

Real estate has consistently proven to be a good investment over time so long as you use some basic common sense. Buying undervalued homes with cosmetic problems is a great way to make money. Just avoid the money traps that are out there.


Author:
Raynor James writes about issues surrounding FSBO properties for FSBOAmerica.org where you can always view properties across the country absolutely free.