The Home Needs Work? Is it a Good Opportunity?

If there ever was one thing that dissuades people from purchasing a home it would be the necessity to perform a multitude of repairs. After all, who wants to purchase a home and then invest tons of money into repairing the property as well as making the requisite time commitment that such repair work would entail? Now, while this situation may sound dreadful on the surface it might actually be a great opportunity for an industrious person.

If you’re pretty handy around the house, look at it this way: say the average market value of a similar home in the area is $250,000. The home you are considering purchasing is valued at $190,000 due to extensive repair work that is required. So, before deciding whether or not the home is a viable investment purchase, examine what the cost of the repairs will be.

If the repair work will cost $30,000 then this could turn a possibly negative…it is a huge positive! Simply do the math: $190k plus $30k equals $220K. Remember, the value of the home after repairs will be in the neighborhood of $250K. So, even with $30k in repair work you will end up with acquiring the home at a $30k discount! This is to say nothing of the equity appreciation the home will eventually accrue.

Of course, no one wants to purchase a home that is falling apart, but if the required repairs can be overcome by the equity one can acquire then this is far from a bad real estate investment venture. But I can’t stress this enough: make sure you have the motivation and ability to perform the repairs within your budget!

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