Many real estate investors earn a living out of renovating run-down properties and reselling them, or holding onto them for rentals. Commonly known as the fixer-upper, it offers you two paths to real estate investment.
Buy a Fixer-Upper and Sell Again
In addition to offering a handsome profit, fixer-uppers can offer a true sense of satisfaction as you transform a dilapidated property into one with true appeal. But before you take the plunge, ask yourself three questions:
1. Can I buy it far below market value?
2. Can I do much of the work myself (or contract it out at reasonable rates)?
3. Can I get the job done quickly?
Remember, every month you add to the project is costing you in lost rental income, taxes, insurance, utilities and more.
Buy, Raise the Rents, and Sell Again
Quite often the tenants in a rental property are paying below market rates simply because the landlord hasn’t raised the rent in years, or perhaps the property is not maintained well.
Both scenarios present you a great opportunity to buy the building, raise the rents (making upgrades if necessary) and resell the apartment building at a higher price. This raises the GPI—the gross potential income—which is the maximum gross income generated from the rent if all the units were occupied.
If you would like more information on these types of investment properties in our area, please don’t hesitate to give me a call or send an email.
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