Fixer-Uppers or distressed properties are often sought by investors that are looking to clean-up and repair them and flip them for a quick profit. Is this a good strategy for you to follow too? That depends on a number of factors:
- Experience with home renovations/repairs – if you are a novice buyer, it may be best to stick to properties that only need cosmetic repairs. If you are experienced with finding good contractors and/or doing the work yourself, distressed properties may be a good option.
- Financing – do you need to finance both the home and the repairs? If you need a home loan to buy a “fixer-upper” and remodel it, look at the U.S. Department of Housing and Urban Development’s Section 203(K) loan program. The program is designed to facilitate major structural rehabilitation of houses with one to four units that are more than one year old. Condominiums are not eligible.
- Building Code – If you are buying a house that has been significantly remodeled, ask for proof of the permits involved before you purchase to avoid future liability for fines.
- Contractors – never hire a construction professional without first checking him or her out. Search them on the New Jersey Division of Consumer Affairs, to find out if there are any outstanding complaints against that license holder. Also, call your local Better Business Bureau to see if there are any complaints on file.
- Value – Don’t forget to include transaction costs along with the value of your time in deciding if the benefits of a lower purchase price out weigh the costs of fixing up the house after you buy it.
The Realtors at RE/MAX first in East Brunswick have a great deal of experience dealing with Short Sales, Bank Owned Property and other distressed property. The Broker, Carl SanFilippo is a New Jersey short sale specialist.
Our list of pre-foreclosure and short sales may serve as a good starting point for investigating distressed properties.