Choosing a Fixer-Upper

Restoring old dwellings for profit can bring in a good income if you know what to look for, including how not to get started, hedging your bet.

July/August 1982
By Marsha K. Strong 
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Restoring old dwellings for profit can bring in a good income... if you know what to look for. 

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Rehabbing—that is, buying up old dwellings and restoring them for profitable resale—can, for folks who are willing to invest a bit of initiative and effort, net up to $40,000 per house. But unless the buyer knows exactly how to choose a home to rehab, he or she could easily take on a loser and end up kissing a lot of hard-earned money goodbye.

HOW NOT TO GET STARTED

I know of one man who found what he thought was an incredible bargain for only $23,500. Sure, the house needed a little repair, but it seemed like a steal at the price. Unfortunately, as soon as he started to work on the dwelling, my acquaintance found that the more things he fixed, the more things he discovered that needed to be fixed.

The wiring, for example—which had been added to the house after it was built in 1910—was all exposed and had to be brought up to code. He wound up replacing the plumbing, too . . . and these two jobs added $12,000 to his cash outlay. A new roof cost him $1,500, and installing a foundation (after finding out that there wasn't one) set him back another $4,500.

Next, the disheartened owner discovered that much of the wooden framing had been chewed to lace by an infestation of termites. Fumigation and wood replacement cost the poor fellow $2,000 more.

And, in addition to the surprises, there were the expected repairs to be made. The would-be home broker had anticipated putting in a new floor and insulating it, for example, and that ran him $6,000 . . . while painting, wallpapering, and kitchen remodeling consumed $8,500 more.

All in all, our bargain hunter poured an additional $34,500 into his $23,500 "steal". The house had cost him a total of $58,000 . . . and after the work was completed, the resale value was just $45,000! If he had only known what to look for and made a few strategic phone calls, the unfortunate man could have avoided the heartbreak (and budget-break) of getting in over his head.

THE COUNTDOWN

However, you can profit from that sad tale by using the following "Rehabber's Checklist" as a guide to avoid pitfalls in purchasing a fixerupper.

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