How to Profit Fixing Up Homes in ANY Economy

Florida Townhomes for Sale

I know someone who did extremely well with fixer-uppers by doing what no one else was doing. He didn’t want to be a landlord – so instead of renting or leasing – he bought, fixed-up and re-sold houses and carried the notes himself.

He specializes in buying starter homes from elderly people ready to sell out. Originally they would let him make payments to them when they were ready to move in with family or move to assisted living but now he has the cashflow to buy them outright.

Level the house, re-roof, fix it up, paint inside and out and then sell it to someone who really wants a house for little down while carrying the noter yourself.

He now has dozens of houses. He said he only ever had one damaged. The families he sells to are happy to be able to own a home instead of paying rent and buy without dealing with banks.

They take good care of the homes and make even more extensive improvements. Over the years he has had some who wanted to move because of jobs or personal reasons who gave their house back to him in better shape than it was originally.

This idea worked well because he started with little cash and a lot of sweat equity.

He bought two bedroom one bath homes in old but still decent neighborhoods where mostly elderly lived. Banks and real estate agents don’t like small old homes or “mixed” neighborhoods so he filled an existing demand.

He started out making payments to the original owners, but it only took a few homes before he could pay cash instead. He is well known in that area and when someone is ready to sell they call him first.

He has a waiting list of families who want to buy from him – working class people who know how to maintain their own homes and are grateful that he works with them.

If you already have rental homes and want to get away from managing them or have do-it-yourself skills, you could adapt his strategy and sell homes to hard-working people who would love to buy a home with low down payments.

Many honest people can simply not qualify for bank loans any longer.

Using this strategy the buyer maintains the home and you are not responsible for future repairs or management.  It isn’t sitting empty risking vandals and you aren’t losing money every month.

I am not an attorney so do make sure there are no legal reasons you could not do this such as existing loans that preclude this strategy. I suspect that he may choose who he sells to based on his other business which sells insurance in that same neighborhood.He would know who always pays on time.

You would want to qualify your buyers somehow. Perhaps you know business owners who know many of the people in a particular neighborhood and can vouch for their character or you could ask for references.

I thought that foreclosures would mean rental prices would go up because those losing their homes have to live somewhere but property management companies tell me rental prices are going down because they are having trouble keeping properties rented.

They say it is because those who can not sell in this market are forced to become landlords. Some of that is their own doing.

The number of people who can not pass they type of background and credit checks many management companies and owners require is enormous.

These management companies could probably find renter but WON’T and those people know better than to bother applying. Most people live paycheck to paycheck so any emergency from their car breaking down to an injury to being laid off = bad credit = unable to rent from many agencies.

People who want to fix up homes can fill that need too. There is a big difference between someone who can’t manage money or doesn’t want to pay on time and someone who had a temporary emergency or got laid off but is now working again.

For those who want to find fixer-uppers there are some excellent resources and tips in this Choosing a Home Restoration Project post including how to research the neighborhood using NeighborHood Scout, estimating costs and more.

Tagged as: fixer uppers, Home Improvement, rent to own homes