Before diving into a fixer-upper, consider what you are getting into. If you are new to flipping, study the craft and know your prices. It is a good idea to have at least basic construction knowledge, even if you are having a contractor do most of the work. Here are the top four things to consider before buying a fixer.
The location should be the first, second, and third thing you consider. If the home and property have great potential, but the area is not desirable, you are heading down a slippery slope. You want to find out what school district the property is located in and investigate the schools rating and popularity. A good school district can add to a home’s value. Talk with the police station and ask about the crime in the area. SafeWise, a home security company, recommends checking out the national offender’s database too.
Cosmetic work is to be expected in most fixer-uppers, but structural damage should not be taken lightly because it can take up a large percentage of your budget. A cracking or sinking foundation is a significant issue that you should have a skilled professional evaluate before closing the deal. Roofs are another factor; investigate the roof’s trusses and support beams as well as the exterior coverings.
Well and Septic
A house without an adequate water supply is in trouble. Just like a home needs water, it also needs to carry waste safely away. If the property is on a well, have a well inspection, and see if you can find out the depth of the well from the Department of Waters in your state. Talk to the neighbors and find out if there have ever been any dry wells or problems getting water also.
Septic systems need to be maintained and sometimes replaced as noted by the US Environmental Protection Agency. There should be enough land left on the property for a second septic field in case the first one fails. If the house is on a city sewer, consider having the line inspected with a camera to see if it is intact.
Contact your insurance representative to get an estimate of how much it would cost to insure the structure and land properly. Some issues that affect the insurability of a home are high-fire danger areas, floodplains, and earthquake zones. These properties may still be insured but with limited coverage, or it may be costly. The US Federal Emergency Management Agency may help protect some land located in flood zones.