Can You Make a Profit from Buying a Fixer-Upper Home?


It used to be fairly easy to flip a house, provided you had the capital to purchase a fixer-upper in the first place. You’d buy a home that needs some work, put five or ten thousand dollars into remodeling it, then sell it for a large profit. Real estate investors have been dancing the same waltz for decades, but many investors fear that the days of easy profits in real estate might be over.

Can you make a profit from buying fixer-upper homes? That depends. Some say that the state of the market has no bearing on whether or not you can profit from flipping a house, while others feel that the market is the key to all real estate transactions. If you have a truly spectacular home, chances are you’ll be able to sell it, and you might not have to take too much of a dive compared to recent years. Nevertheless, the rise in foreclosures does tend to scare your target market, and flipping fixer-upper homes might not be the most stable source of income.


First of all, a fixer-upper home is not a dump in a seedy neighborhood. You don’t want to wipe out your chances of reselling by purchasing a house that has no potential. If you’re going to make a profit from buying fixer-uppers, you have to have an eye for potential in real estate. Ideally, you won’t need to put more than six or seven thousand dollars into the repairs and improvements before you attempt to flip it, just in case you can’t sell it at all.


Major problems like cracks in the foundation or lack of insulation should be red flags to all real estate investors. You can wind up spending tens of thousands of dollars before the house can even go on the market, and by that time you’ll probably have lost money. If you want to make a profit, you’ll probably have to sell all investment properties below market value, just to move them out of your acquisitions folder.


It is also a good idea to choose a fixer-upper home with repairs you can do yourself. If you don’t know how to paint walls or repaint floors or install fixtures, you’ll spend far too much money hiring a contractor. The purpose of buying a fixer-upper is to make a profit as quickly as possible, not to hang on to the property until it needs even further repairs.


As long as there are families and singles looking for homes, you can make a profit from buying fixer-upper homes. You just have to be smart about your methods and pay attention to local trends. To increase your chances, review the following tips:


Rent until you flip. If you’ve already finished the repairs and improvements on a fixer-upper home, you can generate some revenue by renting it out until you can sell. Some houses take several months to find an interested buyer, so consider renting on a month-to-month basis until you’ve closed on the deal.


Look at the neighborhood. When buying a fixer-upper for profit, you need to look at more than just the condition of the structure itself. Homes in good school districts with plenty of community parks, shopping, restaurants and well-maintained landscaping will sell much faster than others. If you want to make a profit at this, be smart about where (and not just what) you buy.


Make smart improvements. Research the area where your fixer-upper is located and find out what local residents want. Installing new counter tops or hardwood floors can skyrocket the interest in a home. Pay careful attention to the landscaping, as well, because curb appeal is high on the list of attractive amenities for prospective home owners.