Home Buying in Houston>Question Details

Trulia Houst…, Other/Just Looking in Houston, TX

Where do you draw the line between a fixer upper and a money pit?

Asked by Trulia Houston, Houston, TX Tue Feb 19, 2013

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Mike Matthews’ answer
THE ARV. after repair value. You make your money when you buy, never when you sell. Tell me what percentage of the homes value did you buy at? If you purchased at 65% minus repairs you can never go wrong.
0 votes Thank Flag Link Sat Feb 23, 2013
Experience.

If you don't have any...it will be a money pit.
If you do, you let the numbers guide you.

Others, who perceive themselves experts, will simply blame their agent.
0 votes Thank Flag Link Wed Feb 20, 2013
I think the question refers to a buyer looking for a primary residence. There are always investors seeking those "ugly" homes that sellers want to dump. One of my clients sums it up ... "The uglier, the better." Of course, he pays cash and generally closes in two weeks. I don't think that's what we're talking about here. These people know that they'll be sinking $100,000+ into a property, and routinely invest such money turning those ugly ducklings into swans ... and making a good living at it. But for the typical homebuyer, it's out of the question.
0 votes Thank Flag Link Wed Feb 20, 2013
"One Man's Trash is Another Man's Treasure" applies here. Depends on what the intended use is.
0 votes Thank Flag Link Wed Feb 20, 2013
Much depends on the results of the inspection. If the property is generally in good shape, and it's simply a matter of updating, the price of the home should reflect that, and the improvements would bring it to market value. This would be the quintessential fixer-upper ... not a problem.

Should there be major issues on top of the need for renovations (foundation, under-slab plumbing, roof, electrical, etc.) the new owner would have to invest a considerable sum just to bring it up to code and make it safe ... add any cosmetic updates, and the property could well become overvalued. In this situation, I'd walk away.

Al Geffon
(713) 213-6350
al@geffon.net
Web Reference: http://www.har.com/algeffon
0 votes Thank Flag Link Tue Feb 19, 2013
Cost of house plus estimation of repairs/renovations equal no more that 70-80% of after renovation value. Are you an investor or looking for a fixer upper. Give me a call. I can help find that fixer upper you are looking for.
0 votes Thank Flag Link Tue Feb 19, 2013
Do you research and get very good experienced contractors .......
0 votes Thank Flag Link Tue Feb 19, 2013
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