There is big money to be made in buying, repairing and selling fixer upper homes. There is also potential for unmitigated disaster. The formula for success lies in knowing what to look for when evaluating a potential fixer upper real estate property. You must be very selective and be able to spot potential disasters before you are committed to the property.

Fixer uppers are a class buy themselves and not usually tied to normal real estate market fluctuations…especially, if you buy the property for a lot less than the adjacent property values. Not everyone wants to buy a fixer upper…so; this narrows the market and also lowers the purchase price.

If you buy at the right price you can make money immediately upon closing the sale. You have to be able to see through the easily corrected cosmetic deficiatvies and imagine the home in a completed ready to sell condition…like a talented artist visualizing a completed masterpiece on blank canvas.

Personally, I find it a really rewarding experience when to job is done and the home is ready to sell.

Finding the right fixer upper property depends on several factors. The first and most crucial is location. A homes value is driven by the properties around it. The first thing an appraiser looks at when evaluating a property is the value of the adjacent properties. In other words a home located in one particular area might be worth a lot more if it was located in another area. Your fixer upper repair costs are the same regardless of where the home is located …although the purchase price may be higher or lower.

Evaluate the neighbors. Pay attention to how the nearby homes are maintained. One rotten egg neighbor can scare away interested buyers and spoil the pot.

Also, you want an easy seller when you are ready to sell…so, be particular when you buy and don’t buy near schools or other high traffic areas and stay away from industrial zoned areas. Shoot for desirable locations in a nice area. This is not to say you can’t make money in less desirable areas…but a slum fixer may not be so easy to sell because the potential buyers may be limited.

All in all the profit potential of a fixer upper is huge…but so are the pitfalls. Learn as much as you can including doing most of the repair work yourself and learn to recognize disasters before they happen.