Financial Advantages Of Renting A Fixer Upper Home

Depending on your goals and comfort level with the current housing market, buying a home that is marketed as a fixer upper will afford you several potentially profitable options. You can hold onto your purchase for a while and try to resell it for a higher price in a good resell environment, or you can “flip” the house, which means very quickly after your purchase you sell it again either after first fixing it up yourself or paying others fix it up for you. Then again, you have a third option of indefinitely renting out the house after you have completed the renovation work. Using your newly remodeled home as a rental can become an excellent investment and a great way to realize profits each month while the house builds equity.

Even if the home itself doesn’t appreciate well due to market changes, the money you make each month will most likely be greater than what you pay for its mortgage. This is especially true if you are able to make use of other people’s money as a form of investment, such as an interested bank or investment group. This is called “leverage,” and leverage can serve as an important form of capitalization when starting a business of buying and fixing up homes for rental profit.

By tapping into a lender for a home loan or special financing, you will be paying them a certain fixed amount each month just as you would on a typical home loan. However, if you remodel the home and then rent it out afterward, you will likely earn more each month than what you are paying for the loan itself. Consequently, you can pocket the extra funds earned from the monthly rent and turn your investment into a profit, even if a modest one. Later, you may also have the opportunity to refinance your loan at a lower interest rate, enabling you to invest in additional properties or other less expensive alternatives. If you are successful at both remodeling a home effectively and renting it out quickly, you stand to earn a meaningful profit.

The primary disadvantage to this approach occurs if you buy too many homes at one time without ensuring you have secured long term tenants. If one or more of your rental units is not occupied for any significant period of time, you may run into the financial problem of owing too much to lenders while bringing in too little to cover the costs. However, as long as your rental units are fully occupied with qualified and dependable tenants, you can continue making a profit while you identify additional homes you can purchase, renovate and rent.

As a side note, to ensure your profits are high, you absolutely must choose a great location for the purchase of your fixer upper home in the first place. Search in a neighborhood that is up and coming, as well as generally regarded as safe. This will keep your rental prices high and comparable to others in and near the neighborhood. You will also attract more qualified tenants who should be capable of reliably paying the rent each month.

For great home selling & buying information, please visit for valuable home community insights and home purchase needs .

More Remodel Homes Articles

Basics Of Leverage For Fixer Upper Homes

As with any business, planning and research are imperative, especially when it comes to buying homes. The more you know about how to buy a home and whose money to use, the better off you will be. Many people choose to buy and sell homes because it can be very profitable when done correctly. This is definitely the case when buying a home that is in need of repair and that you plan to rent out or sell to someone who can renovate it themselves. For maximum profitability, what is almost more important than the home you buy is how you actually purchase it.

Purchasing a home doesn’t need to include spending a lot of your own money. In fact, it can be much more beneficial to you to spend other people’s money. This is called “leverage” and has become an increasingly popular means of buying homes. If you are looking to buy a home to resell immediately or first renovate and then sell, it is important to learn all you can about how to use this method. Leverage can come from a bank – which is how most people choose to acquire their purchase money – or from a partner who is willing to invest in your entrepreneurial endeavor. Of course, the greater your success, the more the investor stands to gain.

Leverage is often used when buying an investment property that you can rent after completing its remodeling. For example, if you buy an investment home with only a small amount of your savings and use the bank to finance the rest, you stand to make a nice profit and will consequently have some savings left over to invest in more homes. This is because after making your monthly payments on the house to the lending institution, you will have the remainder of the rental agreement price as a profit to you (minus taxes and other expenses, of course). Basically, the property itself is paying for the loan, and you do not have to use any more of your own money to fund it.

It is the same basic approach when you are buying a home that needs remodeling or repair. There are many homes on the market that have been left in bad shape due to mistreatment from previous owners or just general wear and tear. Foreclosures, for example, are extremely plentiful because of the combination of high home prices and consumer indebtedness, and it is fairly easy to find one at much below market value. You simply buy one of these homes and then resell it to another individual who is also in the business of renovating homes for profit. This could be a business partner, or simply someone you know from among real estate agents. That way, you make a profit while they fix up the home, avoiding the direct labor yourself.

Buying and selling homes as part of a business takes not only knowledge of the general work involved, but how to do so without risking your financial security. By using leverage, you avoid risking your own financial well-being and can make a tidy profit at the same time.

For great home selling & buying information, please visit for valuable home community insights and home purchase needs .

Find More Repair Homes Articles