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How to Find Fixer Upper Homes for Sale

How to Find Fixer Upper Homes for Sale

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At New Western, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.

As new construction costs keep rising, It’s becoming more and more popular to invest in real estate by flipping houses because the profit margins can be well worth the effort. Regardless of your strategy, be it fixing and flipping, using the BRRRR method to keep it cash flowing long-term leverage it to future property investments, in order to be successful in the real estate market, you need to know how to find fixer upper homes with potential.

We’ll examine efficient techniques for finding potential fixer-upper homes, as well as important factors to take into account when considering them.

 

How to Find Fixer Upper Homes Like the Pros

There are a number of strategies you could try to boost your chances of finding fixer upper homes that need some work. These are some of the most successful  methods experienced investors use:

 

1. Real Estate Agents and the MLS

Real estate agents specialize in investing in distressed homes, helping find hidden gems in the fixer-upper housing market. Their extensive networks can identify unlisted or new listings, and they can check the MLS regularly for properties that are in the foreclosure process.

 

2. Networking

When looking for properties that need some work, it’s important to have strong connections within the real estate industry. One way to keep up with the latest listings is to join online forums made specifically for real estate investors, attend local investment group events, and network with other investors. It doesn’t hurt to form connections with experienced contractors, handymen, and so on because they may know distressed property owners who are eager to sell their properties.

Real estate networking group

3. Create a Website

Creating a website dedicated to your real estate investing business can attract motivated sellers who are specifically searching for investors. You can include information about your previous investments, contact details, and a form sellers can use to submit property information. Having a portion of the homepage, and even a dedicated page on the site that specifically talks about purchasing and renovating fixer upper properties can be helpful. It lets the owners of those homes for sale that need a lot of work know you are interested in that type project.

It is easier than ever to create a website these days, but that doesn’t mean it won’t take some work and upkeep, as well as cost a little bit of money. So don’t take this step until you’ve done your research on getting a website that fits your needs, and have a way to accomplish it without it becoming too much of a distraction.

4. Direct Mail Marketing Campaign

You can find viable fixer-upper investment properties by sending targeted mailings to homeowners in your target neighborhoods. In these mailers, it should be very clear that you are an investor who’s looking to buy homes that are struggling.

 

5. Auctions and Foreclosures

You can find homes for sale that are way below their market value by going to real estate auctions or keeping an eye on foreclosure sales. In order to get their money back, banks and auction houses will sometimes sell fixer-uppers and distressed properties for just a fraction of what they could be worth on the market.

 

6. Driving for Dollars

This is a term used in real estate dealing to describe when investors drive around different neighborhoods looking for telltale signs of neglect, such as lawns that are too long, windows that are boarded up, or a lot of damage to the outside of the house. Even though these homes may not be on the market yet, you might be able to talk to the owners about selling them.

 

7. Real Estate Investor Websites

Even if you can’t get to the MLS, real estate investment websites are a great way to get information. These websites let anyone see real estate listings, even ones for homes that aren’t on the market yet. Properties that are owned by banks, subject to foreclosure, short sales, or auction are some examples. A paid subscription is required to access certain websites, while others are free to use.

 

8. Bank and Lender Websites

Another place to look for houses that need some work is on bank and mortgage lender websites. When a lender forecloses on a property, they have the legal authority to regain ownership of the property in order to recoup some of the costs. In order to sell these houses, they want to set a price that is reasonable for everyone.

As a general rule, they will have a page on their website specifically for houses that are owned by real estate companies or banks. Usually, you can check out the listings and make your offer right on the website.

 

9. Tax Records and Tax Sales

A surprise source for finding houses in need of repair is tax records, if you’re ready to get your hands dirty and do some research. To get your hands on public tax records, just head over to the local municipality’s website. You can find your local assessor’s office online; just use the search tools to peruse their record database.

Homeowners who are having problems paying their taxes are probably going through some kind of financial hardship. Some people may also be behind on the property’s upkeep and are at risk of foreclosure. This gives you the chance to approach the homeowner directly with an offer before the property goes back to the mortgage lender.

real estate tax records

 

10. HUD

The Department of Housing and Urban Development also has a page on it’s site for government-owned properties for sale. These properties are in varying states of disrepair, but with a bit of searching, you could find a diamond in the rough.

Some of the government agencies that have properties for sale include:

 

11. Online Market Places

Many people use social networking sites like Craigslist and Facebook Marketplace to find houses in need of repair. These sites offer a better opportunity to find a good deal and learn about the past of the fixer-upper, helping determine the cost of repairs. The Federal Housing Administration’s website also lists homes in need of work in specific areas, providing information on the condition of the fixer-upper, such as termites or structural damage, allowing buyers to avoid houses that need too many repairs for their budget.

Online real estate marketplace

 

12. Wholesalers

When looking for a property to renovate as an investment, a wholesaler is a good place to start looking for distressed and affordable options. Remember, though, that there may be other real estate investors vying for the same property you have your eye on. That shouldn’t prevent you from doing your due diligence on that property and any other properties they may have.

 

Why Many Investors Prefer New Western

With so many different ways to find fixer uppers, trying to find the right investment property that fits your needs in your area can be a daunting task. New Western understands that time is money and have created a platform that carefully curates properties that aligns with your investment goals.

Since we operate in many of the top markets across the country, you can bet that our local teams of licensed agents can help you find the best deals in your area that fit your situation. If you’re on the fence about doing a complete renovation project, our agents can help you find properties that only require cosmetic updates. However, if you want to live out your dreams of being like the HGTV hosts, we can help you find properties that need a complete overhaul.

Whatever it is you’re looking for, we can find it! If you have any questions along the way, reach out to our team and they’ll be happy to help. And, if you want to bolster your knowledge about real estate investing, we have a robust education center with guides that touch on real estate investing strategies, how to select your investment, financing options for real estate investors, and more.

 

How to Choose Between Different Fixer Uppers for Sale

You must come to terms with the fact that not all fixer-uppers are worth your time and money as you peruse the listings for sale. Despite the fact that a fixer is guaranteed to have certain basic cosmetic issues, there are some items that you could not want to deal with and that might cost a lot more than they are value. As you look for a fixer-upper, here are some things you should keep in mind:

 

Location Is Key

Location is very important when it comes to real estate investing because it affects how easy they are to sell and how much money they can make. You should think about how desirable the area is, what amenities it has, what school district it is in, and how close it is to job centers. Homes in places that people really want to live in are more likely to sell or rent quickly and for more money.

So, you’ll want to look for well-kept lawns, tidy streets, and a a sense that people take pride  in their homes throughout the neighborhood. There is a better chance that properties in neighborhoods with these traits will sell for more money and attract buyer interest.

 

Condition of the Property Is Important

This might span a wide range, from a house that needs cosmetic improvements to a house that needs extensive renovations. It’s important that you look for issues with plumbing, electrical systems, foundations, and roofs because a renovation plan that deals with these major systems is likely to be both costly and time-consuming.

Ideally, you should look for a house that has “good bones” if you want to keep the costs of repair to a minimum. This means that the house should have a sturdy roof and foundation, plenty of natural light, quality construction, and a timeless design.

 

Appealing Floor Plan

While preferences differ by region, the standard American home’s floor plan features three bedrooms and one bathroom. However, if you’re in a bustling city, a two-bedroom condo might be the most popular layout.

Nevertheless, a well-designed floor plan is essential for every house. If you’re thinking about adding entrances, rearranging rooms, or tearing down walls, you should know that these types of projects are expensive and requires a longer time frame than you might like.

 

Pros and Cons of Investing in a Fixer Upper Home

Before getting started, it’s beneficial for those new to this type of real estate investing to weigh the benefits and drawbacks of buying fixer uppers as a real estate investment strategy.

 

Benefits of Fixer-Uppers

There are quite a few advantages to buying a fixer-upper house:

  • Lower Price: These homes are often sold for less than their market value because they need work. For example, a home in an area where most homes sell for $300,000 could be bought for $200,000 if it needs a lot of work. If the repairs cost $50,000, you could gain $50,000 in immediate equity. This is a simplified example, but you get the idea.
  • Less Competition: Because fewer people are ready or able to take on the challenges of a fixer-upper, there may be fewer competitors and more power to negotiate at the table.
  • Potential for Higher Resale Value: If repairs are done correctly, there is a big chance to make money when the house is sold again. For instance, putting $50,000 into smart improvements could raise the home’s value by $100,000, giving the investor a big return on their money.

 

Potential Risks Involved

Even though the benefits are compelling, there can be big risks with fixer-uppers:

  • Surprise costs: During renovations, extra problems that need fixing are often found, like electrical or water problems or weak spots in the structure. These unplanned problems can make the total cost go up by a huge amount.
  • Dedication of Time: Fixer-uppers can take months or even years to finish the renovation project and management process.
  • Overestimating Resale Value: If you spend too much on renovations, the property’s resale value might not go up as much as you thought it would. This is especially likely if the changes are too personal or if the housing market goes down.
  • Complexity and Stress: Managing contractors, sticking to budgets, and choosing designs can be difficult and stressful, especially for people who are new to investing in real estate or home repair.
  • Tax Implications: Profits from fix and flip deals are subject to capital gains tax, which can impact the overall profitability of the investment. On the other hand, if it’s going to be a rental property and a source of passive income, that’s a whole other can of worms. It would be in your best interest to consult with a tax professional to understand the specific tax implications in your area.

Real estate investors can better prepare for what’s to come with a fixer-upper investment property if they know about both the pros and cons. For a property that needs renovation to become a profitable and rewarding project, you need to make smart choices to avoid costly mistakes.

 

How to Find Fixer Upper Homes FAQ

1. Where can I find potential fixer-upper properties to invest in?

There are a number of ways to find prospective fixer-upper homes. Try a number of different approaches, like checking the Multiple Listing Service (if you’re working with a real estate agent or you, yourself, have a real estate license), making connections with other real estate agents, looking through public records, and creating a website.

In addition, think about using online classifieds, going to real estate investment groups, and marketing through direct mail. There are pros and cons to each approach, and they may open up new opportunities.

2. What are the key factors to consider when identifying a fixer-upper property for investment?

When choosing a fixer-upper house to invest in, it’s important to take into account its location, state, similar floor layout, and cost analysis. You’ll also want to take into account where the property is located. If it’s in a desirable neighborhood, it’ll be much easier to sell the property once the renovations are completed.

Also, it’s important to evaluate the property’s condition so you can figure out the renovation costs. Before doing anything drastic to the floor plan, remember that it’s important that the floor plan is similar to other homes in the neighborhood. And, to make sure your renovation plans stay within budget, don’t forget to do a thorough cost analysis.

3. How can I evaluate the potential return on investment for a fixed-upper property?

Evaluating the potential return on investment (ROI) for a fixer upper property involves considering the acquisition cost, renovation expenses, holding costs, and estimated resale value. Calculate the potential profit by subtracting the total costs from the estimated resale value. It is also important to factor in the time and effort required for the renovation process.

4. What are some common strategies for financing the purchase of a fixer-upper property?

Common financing methods, including HELOC, hard money loans, and private investor partnerships, are common ways to get the funds to pay for a fixer-upper investment property. Do keep in mind that different financing options will have their own assortment of conditions and considerations to think about.

We have an extensive guide that breaks down the many ways investors can finance their investments. You can learn more about these options by reading: Financing Your Investment: What Are the Best Ways to Finance Your Investment Property? Learn From the Experts.

 

 

The Importance of Understanding the Market, Timing, and Location

When looking for properties that need some work, it’s important to be familiar with the market conditions, when to buy, and where to look. The main factors to think about are these:

Market Dynamics: Researching the state of the market is essential before kicking off a fixer upper renovation project. Consider the real estate market’s general health, pricing patterns, and supply and demand. It will help you make smart choices when looking at possible homes now that you know these things.

Timing: In the real estate market, timing is everything. Always keep an eye on the local real estate market, paying close attention to seasons and trends.
For instance, more people may be looking to buy a home in the spring and summer, which could lead to a quicker sale.

Location: The success of renovating a fixer upper depends a lot on its location. Keep an eye out for homes in highly sought-after areas where houses are selling quickly or whose rentals are being scooped up as soon as there’s a vacancy. You’ll want to look at the local conveniences, school systems, and proximity to business districts. Picking a home in a desirable neighborhood will increase your chances of a fast sale and a good price.

 

Summing Up: How to Find Fixer-Upper Homes

Finding a run-down property that fits in with your financial and real estate plans can be a wonderful adventure, but it’s not easy. As we’ve seen, knowing the market inside and out, picking homes strategically, and managing your finances meticulously are the three most important factors in achieving success. If you know how to use the correct resources, you’re able to improve your investment returns by seeing possibilities that others miss.

Whether you’re just starting out in the real estate market or are a seasoned pro seeking to diversify your holdings, always keep in mind that you’re not in this alone. You can get free professional help from New Western in finding the right fixer-upper. Our goal is to make the process easier and more accessible for investors like yourself. Our team is committed to finding properties with a lot of potential and matching them with the right investor. With New Western’s help, not only will you know how to find fixer-upper homes, but you’ll also be on your way to success!

Disclaimer: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.