A fixer-upper home is a home that requires some repairs. Fixer-upper homes may be advertised as "Handyman Specials." The type of work needed may be cosmetic or deep and it is up to the buyer to assess the estimated repair costs to see if purchasing the fixer-upper home will be a good investment or a bad one.
Location is important even if the fixer-upper home buyer has carefully estimated that repairing the home will be a good investment. If it's the worst looking home in a great area, fixing it up will help it sell and raise its value. But, if a fixer-upper is located in a less desirable or declining neighborhood, it would still sell for less in prime condition because of the area. Look for fixer-upper homes in neighborhoods where home prices are appreciating in value.
Find out the prices of regular homes, not fixer-uppers, in a good area and then compare those prices to the cost of the fixer-upper home you're considering purchasing. You can try to speak to the home owners in the area to help you figure out the market value of the home. If things seem favorable, then you can start looking at whether the home itself would be worth fixing up either to live in yourself or to sell.
You need a clear assessment of what is needed and what it will cost. Don't forget to add in the cost of labor — both your own time and that of contractors. You also may need to pay experts to help you determine how serious problems are. This may be well worth the money spent if you get qualified experts since they can help you avoid purchasing a home with severe structural damage that is expensive to repair.
If the home is older, it may contain lead paint or asbestos. The entire wiring or plumbing may have to be replaced. Consider every detail before deciding to purchase a fixer-upper home or you could spend a substantial amount more than you thought and most or all of your profits could easily be eaten up by unexpected repair costs.
