Property Investment Basics: Wary Of Fixer-Uppers

by Adam on August 14, 2017

 

In today’s economic environment, real estate investments are more appealing than ever. There are many possible routes to take, and investing in fixer-uppers is one of the most attractive. After all, developing a property by giving it the TLC it deserves should bring hugriske financial rewards, right?   

 Delving into the world of fixer-uppers can certainly be very rewarding. However, it isn’t always as great as it’s cracked up to be. Here’s why you must learn to view the full picture.

They Signify A Huge Risk

 All investments carry a risk. When physical assets, such as property, are involved, the health of those items is key. While there are no guarantees, even with new builds, there is no doubt that the risks are greater when dealing with unloved properties.

 In the best scenarios, all damage will be cosmetic. Hiring an independent property surveyor will give you the best chance of spotting any very costly problems. However, there’s still a good chance that they will miss things. If you don’t have the budget to deal with those potential issues, it might be best to steer clear.

 The last thing you need is to be left with an unfinished project that will struggle to sell fast or well.

Delayed Return On Investment

 When entering the world of investment, you’ll come across various terms. Return on Investment, or ROI, is probably the most important. After all, the whole point of getting into this game is to make money. As an investor, you want to see quick returns. That might not always be possible with a fixer-upper.

 After purchasing the property, you’ll need to complete the transformation before thinking about the next step. If all of your capital is tied up in this project, it could delay progress elsewhere. Conversely, when done right, this type of investment can yield big returns in just a matter of months. Still, appreciating the full situation is key.

They Will Consume Your Time

 For most investors, those activities are a secondary income. Therefore, it’s important to prevent them from causing negative impacts on your primary career. The ability to take a backseat role is just one of the reasons why a growing number invest in overseas property. Because if you can make money without working hard to do it, it leaves more time to enjoy those proceeds.

In truth, fixer-uppers are best left for those who wish to complete them as a labour of love. If money is your main motivator, gaining profit in a time efficient and stress-free method should take priority.

Profits Aren’t As High As You Think

 The thought of high ROIs is unquestionably one of the main selling points behind the popularity of this route. However, those profits may not be as high as you’d think. After all, there are many other costs that must be factored in.   

 Delays to work can result in increased costs while marketing and other elements can dent profits too. While a traditional buy to let idea can offer problems, it might be the better way to see quick revenue and large long-term returns. After all, rental income gives you a return without relinquishing the asset.

This post shouldn’t be viewed as a warning to never use fixer-upper investment opportunities. Nevertheless, it is a reminder that there’s more than one way to achieve success in the real estate market. Finding the right option for you is the first step en route to profits.

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