Years ago an investor friend taught me the right way to approach fixer-uppers. I watched others just buy a house for what they thought was a good deal, without a plan. My friend pointed out the flaws in that approach. You don’t think price until you do your homework. You have to start at the end. Here’s an outline of how he did it:
-
Determine what the house will sell for when it’s ready.
-
Figure every expense: buying, repairing, holding, selling, and $1000 for unexpected things.
-
Subtract this from the expected sales price.
-
Subtract the profit you want.
Now you have the absolute highest price you can safely offer, so you offer less, of course. He never lifted a hammer, prefering to let others do all the manual labor. I watched him do 14 houses one year, making a profit on every one. This is the safe way. Hope it’s of use to some of you.
Steve