Purchasing a fixer-upper property, whether for a flip or for long term leasing and maintenance, can be the most profitable investment you ever make. For one thing, you can often purchase it at well below the selling rate of similar properties in the neighborhood, and unlike other residential properties the price isn’t nearly as reliant on the current market conditions. It may seem like the crucial element in making a good investment is to select the right property, one that everyone will want once you renovate it, but that is so unattractive right now that it is seriously underpriced. You want a property that has the right kind of relatively easily and inexpensively corrected flaws.
Easily corrected flaws include:
Peeling paint and patchy wallpaper
- Worn out tiles and carpeting.
- Improving ventilation and lighting by installing ceiling fans and light fixtures.
- Broken windows
- Leaky toilet seats
- Refacing kitchen cabinets.
- Installing new doors.
- Exterior painting.
- Installing a deck
But sometimes the above fixes are insufficient to achieve the desired effect, and more expensive fixes are required. This can include
- HVAC replacement/ central air conditioning installation
- Reinforcing the foundations.
- Replacing water lines and/or electrical wiring.
- Installing new windows to improve lighting and ventilation.
Right location
Location, location, location. Investing in a fixer upper situated right next to a school or at a busy intersection is not getting the most bang for your back, because the location will reduce the impact of any renovation on your resale price and rent. You will be getting only two korunas for every one you invest (or one… or less), rather than the three or four you would get in a more attractive location.
Right layout
You want a property that will appeal to the largest possible selection of buyer and/or tenants. As a rule of thumb that means a three-bedroom home, but this is heavily dependent on… that’s right, location. In any event, it’s not just the number of bedrooms or square feet: it’s how they are laid out. A bad floor plan can destroy your resale value and it is generally too expensive/unfeasible to move the walls.
Selecting the right management company is more important than selecting the right property
That said, while selecting the right property may seem like the most important choice to make, and you may feel that once you made it you are over the hump, the truth is that your journey has just begun and you still face the most difficult choice. The most important choice to make is selecting the company that will oversee renovation (and, by in by, can probably offer better fixer-upper opportunities than you can locate on your own). The sad and sorry fact is that renovation always costs more than what you originally think it will. Problems are discovered that were overlooked on first inspection, the contractor exceeds his initial quote and disappears if you don’t pay up, municipal authorities declare your water line inadequate and demand complete replacement… the potential for complications is endless, especially for overseas investors who cannot supervise the work personally and who are unfamiliar with local mores and regulations.
And that is where we come in. We know how to look in the right locations for opportunities, perform a pre-sale property assessment, offer an optimal renovation plan that will maximize rental rates and resale value within an acceptable budget, choose the right contractors and professionals to carry out the renovation, craft a contract that will protect your interests, deal with the authorities, keep renovation on schedule – and of course, secure tenants as soon as it is done.