Most buyers want a home that
is in tip-top condition and ready for them to occupy, but many homes go for
bargain prices because they need work. Buyers love "fixer-uppers" for
the obvious reasons: the price and the satisfaction of designing something
attractive. Whether you are buying the property for yourself or as an
investment, choose a house that is in a good location and structurally sound. It
should be priced enough below market value (usually 25%) to allow plenty of room
for a profitable re-sale after the work is completed.
It is important to educate yourself before taking
on such a project. For example, inexpensive cosmetic improvements often give the
greatest return -- paint will increase the value three times for every dollar
invested. Landscaping, carpeting, and light fixtures are also relatively
inexpensive improvements. Expensive structural improvements, such as a new roof,
plumbing, wiring, or foundation repairs, usually add very little to the market
value of a home.
Remodeling a kitchen will rarely add more than
the cost, but new appliances usually give a fine return. An extra bathroom is
the best renovation from an investment point of view, often giving twice its
cost in added value; the worst investment is a swimming pool.