I have a client that is looking for a fixer-upper house in Minneapolis. This client wants to purchase a house, fix it up, and then sell it for a profit. I'm going to share some insights on some of the considerations that go into buying a fixer-upper home.
1. One consideration to keep in mind is location. You want to select a location that has houses that sell in a wide price range. For instance, you want to purchase a home that is well below the average price of other houses in the area. Find a neighborhood that has homes that sell in the $120k price range as well as the $200k price range. That leaves room for the cost of improvements, as well as profit.
Number of Sales
2. A second consideration is the number of sales in the higher price bracket. In the above example, you'll want to see how many houses sold at about $200k within the past 6 months. If there is only 1 sale in the past 6 months, but there are a bunch of houses currently available, that may indicate a difficult sale. On the other hand, if there are 15 sales around $200k, then the house will have an easier time selling.
Level of Improvements
3. A third consideration is the level and quality of improvements. You want to aim for the middle of that neighborhood's price range to have access to the most buyers. Don't overimprove which could put your house into a higher bracket than the average, which then would put the house into a bracket with less buyers.