When the listing service defines the property as a “fix up”, that fix up could be as simple as replacing the carpet and repainting or as complex as mud-jacking the basement floor, replacing copper pipes and rewiring the entire house.  Any of these scenarios can lead to a big payback in the future as long as there is sufficient buffer in the purchase price.  Buying a remodeling project is not for every one so make sure you consider the following before making a decision.

Things to consider when buying a fixer-upper:

• Is it the right property to fix-up? The most important consideration is price. Make sure the acquisition and rehab costs don’t add up to more than what it would cost to purchase a similar but move-in ready home. If you lack the skills to accurately calculate the After Repair Value (APV) and the rehab costs; seek advice from an expert. A knowledgeable REALTOR can negotiate a purchase price that will insure you the value you need to make a profit.
• Will the time commitment work for you? Remodeling usually takes longer than expected especially on your first investment.  Go into the project with reasonable expectations and time lines. Be careful to stick to the original plan: add-ons can extend the completion date and blow the budget.
• Are you going to be able to afford the remodeling? Make sure you do a detailed list and estimate of cost of materials and labor.  Leave a buffer for unanticipated problems that are sure to arise. (i.e. replacing a few tiles around a bathtub can easily turn into replacing drywall and tiles if there is water damage.)
• Will you need help? If the home needs major repairs, make sure you have the skill set and time to do it or have access to reliable contractors.  Drywall work is not that difficult but when you watch the pros speed through a room, you have to decide if doing it yourself is truly wise and cost effective.  Take some time to determine what you should and should not attempt, then factor in the cost for doing so.

Good planning, sticking to your budget and having reasonable expectations can make the difference between a flop or a profitable flip!