Fixer uppers, sometimes known as rehabs and junkers, are common investments in today’s real estate market. If you are wondering why they are such popular investments, there are several reasons. First of all, there is a serious abundance, and I mean a huge abundance of distressed homes in today’s market and they are selling for pennies on the dollar. Secondly, with the economy being so poor, the bottom line is that cheaper homes are easier to buy. People are in need of low cost homes, and this makes fixer uppers and rehabs an easy sell. But buyer beware, this doesn’t mean that all fixer uppers are a wise investment.
First of all, the vast majority of fixer uppers are located in low income, economically distressed areas of town. Most of these homes have a much higher investment risk simply because they are in less than ideal neighborhoods, and they do not appreciate in value. If you are a newbie investor, you may be wise to at least stay out of the worst areas of town. The reason for this is because as a newbie investor you don’t really know a good deal when you see one and overpaying for a junker will sink you!
Keep in mind that it is a buyer’s market and you can demand your terms and prices. If you cannot negotiate the price or terms you want, it is best to walk away. For example, if you find an owner willing to owner finance the property for you; it would be in your best interest to try to negotiate an interest free purchase. With so many distressed homes on the market, you should NEVER settle for poor terms when you can easily find what you want elsewhere. If the seller wants to get rid of their property badly enough, they will meet your terms!