A guide to purchasing a fixer-upper

In the world of real estate, purchasing a rundown or neglected investment property has a certain allure for potential buyers searching for the promise of a great return on investment. However, to enjoy the financial benefits of purchasing a fixer-upper, you have to invest in the right property. Purchase the wrong one, and you could spend far more time and money than you initially thought.

If you’re interested in buying a fixer-upper, here are some important factors to take into consideration: 

What is a fixer-upper? 

A fixer-upper is a term commonly used in real estate to describe a property, usually a house, that requires significant repairs, renovations, or improvements. These properties are often sold at a lower price compared to move-in-ready homes due to their current condition. 

The appeal of a fixer-upper lies in the potential to transform the property into something better—either by increasing its value through renovations or by customising it to suit the buyer's preferences.

You will need to arm yourself with knowledge, as there are a range of important factors to take into consideration to help you find a property with real potential.  

Here are a few factors to keep in mind when searching for your next investment property: 

Budget

To get the most from your investment, you need to determine the budget for both purchasing the property and renovating it. Therefore, you need to ensure that the purchase and renovation costs are low enough that you would be able to recoup your investment and make a good profit when you eventually sell. Before you start your property search, figure out how much you would need to spend on buying and renovating to make sure you do not spend more than you bargained for. Factors such as potential property bonds, transfer costs, renovation costs, and property purchase prices should be included in your budget calculations. 

Location

Ultimately, the importance of location in real estate boils down to the concept of "location, location, location." Properties in desirable neighbourhoods or areas with good schools, convenient amenities, and low crime rates tend to have higher values and better long-term appreciation potential. Having gorgeous renovations will mean nothing if it is situated in an undesirable location, which could lead to a financial disaster. Experienced real estate agents advise searching for properties that have easy access to amenities such as shopping centres, hospitals, schools, parks, and entertainment venues. Factors such as noise levels, air quality, safety, and access to green spaces impact the overall quality of life and can also help boost property value. 

The Condition 

The condition of the property is another important factor as it impacts the overall cost, the feasibility of renovations, the potential return on investment and the amount of commitment required to bring the property up to the desired standard. A great way to ensure you get your money’s worth is by creating a list that distinguishes between cosmetic issues and major fixes for the property. 

Here are a few examples: 

Cosmetic Issues: Replacing outdated fixtures, paint or flooring.

Major Fixes: Replacing faulty wiring, cleaning up mould, replacing windows, repairing or replacing the roof, etc. 

Cosmetic changes are generally less costly and easier to address compared to more significant structural repairs. If it’s an option, it is beneficial to pay for a professional home inspection to help you determine what is needed before making the purchase. 

Where to find your next fixer-upper?

Property auctions are an excellent way to find your next investment property or renovation opportunity. It offers an exciting environment for prospective buyers and can be a simple, transparent and affordable way to acquire property. However, it’s important to note that bargains are not guaranteed and doing your due diligence is vital to ensuring you reap the financial rewards of purchasing your next fixer-upper on auction.  

Ultimately, buying a fixer-upper at auction can be a rewarding endeavour for those who are willing to embrace the challenges and opportunities it presents. However, the decision to embark on this renovation journey should be made with your eyes wide open, your skillset recognised, and your financial resources aligned.

If you’re ready to take the plunge, start browsing upcoming property auctions today or download our app for extra convenience.