Real estate has long been championed as one of the greatest ways to accumulate personal wealth over time. Even paying down the house you live in via your mortgage builds equity over time and increases your personal net worth. However, not all real estate purchases are meant to become someone’s forever home.
The process of flipping houses involves buying a house cheaply and then reselling it at a profit, usually after some minor renovations have been done to improve the value. Some homes just need a few things straightened out, while others will require lots of work. The houses that require more work often sell incredibly cheap compared to nearby houses because everyone understands the extra burden involved. That burden of inconvenience can easily be translated directly into increased money when selling the house.
Here’s a list of problematic houses that might seem impossible to fix, but can be a flipper’s dream when it comes to bargaining:
Unfortunately, some people are prone to hoarding. Over time, the house will fall into disarray with risks of mold growth, bacterial colonization, or even rotting of the home itself. Not only that, the home is often still filled with the item collection of the former resident and will need to be removed. This is a realtor’s worst nightmare as average buyers will steer clear of the house, complicating the problems selling a hoarder house.
A flipper with a keen eye for how much it will cost to have the home back in relatively pristine condition can make a healthy profit by choosing to buy the house and do all of the work necessary, with the realtor happy to get the home off of their hands. When a realtor wants a house moved, they’ll take thousands off the original asking price. Often, hoarder houses are simply just too dirty. A little spit shine and some days of manual labor can make it look brand-new.
Houses that have Suffered a Disaster
Homes that have fell victim to a fire or the results of a natural disaster are often moved at a lower price, due to the understanding that work will have to be put into the structure before it’s suitable for human dwelling again. Should you be able to convince the realtor that the repairs will cost much more than you expect them to, you can reasonably get that knocked off the asking price.
It will take time to renovate the house, and in the case of natural disasters, there’s often a cool down period required for the general public to see the area as safe again. However, once the area begins its renaissance, you’ll see home values skyrocket, and it will be your indication to sell.
Some older homes are still stuck in the past with regards to wiring, hydro, or other modern conveniences. Some of these homes are actually poised to be modernized fairly simply and at a minimal cost. However, to the average home buyer, it might seem too cost-prohibitive or inconvenient to go through all of the trouble themselves. This means the house can be bought at a premium, inexpensively modernized, and then resold at an increase in value that’s much higher than the costs of previous modernization.
Just because these houses are difficult to sell to the average person doesn’t mean there isn’t value inside to be unlocked. People can be extremely picky, and minor fixes can be seen as deal breakers. Each time the seller faces people walking away over this error, they are more willing to take a lower offer as long as it’s serious.
A keen eye for what’s a serious and major problem versus what’s a minor hassle that can be dealt with easily is what separates an amateur house flipper from a professional. Everyone else’s apprehension can be your profit, as long as you know what you’re doing.