Buying a fixer-upper
Buying a home that is in need of attention can be a highly beneficial investment if the purchaser takes the necessary precautions, says Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa.
“It is important that they do the required research before committing themselves to the purchase," says Goslett.
"This is especially important when looking for homes that would be considered as a fixer-upper as the buyer will need to pay additional money to renovate it.”
He adds that there are several advantages to purchasing a home that needs renovation.
“For many investors who have the capital to spend on renovating, purchasing a home in need of attention is a way to secure a higher profit margin when they sell the property at a later stage, provided of course that they are savvy with how much they spend fixing the property,” says Goslett. Another advantage is that there is often less competition in the market for these kinds of homes, which means that they generally sell for lower prices than most of the homes in the area.
Goslett provides some tips for those looking for the ideal fixer-upper: Location is always vital
No other aspect will have a greater impact on the property’s potential for appreciation in value than its location.
He points out that from an investment perspective, homes that are in proximity to a range of amenities such as shopping centres, entertainment areas and good schools generally see a higher percentage of capital growth over the long term than those that aren’t.
How the home is designed
Renovating a home is one thing, but completely changing the design of the property can be very costly. Goslett says that this is why it is important that the shell of the home is designed well and laid out correctly.
Sometimes it is better for buyers to walk away than to try to correct a bad design.
The overall condition of the home
While certain renovations are manageable, if there are too many defects or possible structural damages, the home may not be worth the money or the effort. A good fixer-upper is a home that is at least in a liveable condition.
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