When you are making your first steps towards becoming a real estate developer, it is often helpful to start out with a deal that is financially supportable. Frequently, you will see a house appear on the market that looks like it will need a lot of work – it may have been lying vacant for a time, or may have been damaged by a storm, a flood or some other horrible incident. These houses usually go on the market for a fraction of their market value, and if you have the borrowing or spending power to buy them and do them up, they can be a quick and easy profit.
The simple reason behind this is that some people simply want to up and move when their old house has been damaged, and they will sell cheaply for a quick deal. This benefits the buyer because it allows them to pay a reduced price and then spend what it takes to turn the house into a viable, buyable property for a family to move in to. Often there is a significant profit margin because the house is located well, architecturally fine and attractive to new buyers.
These houses are known as “fixer-uppers”. When you buy them, they need a lot of work. But if you are prepared to put that work in, you will find that the whole process is not that expensive. As long as you have done your research, there is a very good chance that you can turn a profit which will allow you to try again with another fixer-upper or a sounder property.