Finding A Perfect Fix and Rent Property for New Investors: A Complete Breakdown

Fixing and renting is a common real estate investing strategy that newer or less-experienced investors use to safeguard their financial investment. This typically takes place when the investor purchases an older home, fixes it up and then rents it out to tenants over a longer time period to recoup funds. Fix and rent investments are becoming increasingly popular for their ability to bring dependable monthly income, and how sought-after they are by individuals in the current housing market.

Keep reading for a complete fix and rent breakdown for new real estate investors and how to find their own:

How It Works

With fix and rent investments, real estate Investors identify a property that needs renovation, acquire and make some upgrades, and then hold onto it and find tenants who can rent it instead of selling it. This method is increasingly popular with investors as it’s considered easier than renovating and selling a property outright, and finding tenants is much easier than finding a committed buyer. Fix and rent properties require less experience from the investor, as property managing individuals can be hired to oversee everything from tenant screening to arranging repairs and maintenance.

This type of real estate investment therefore allows investors to build wealth sustainably, let’s them benefit from the appreciation of the property that takes place and builds significant equity. Fix and rent strategies are planned to be more long-term, and there are multiple different kinds of fix and rent properties available for investors to specialize in.

Types of Fix and Rent Properties

There are several different kinds of fix and rent properties investors can target, all with their own advantages and disadvantages. Turnkey properties are one such option, describing homes which are finished and ready for buyers to move into, without any further fixing or renovations needed to make it livable. 

There are also rental properties like vacation homes, where the investor purchases a property in a popular tourist destination or vacation spot and rent it out during the busy season. Purchasing an apartment to rent out is another option, often a more affordable investment than a standalone house and typically come with a managing body and other professionals who are involved.

Then there are options for larger commercial real estate fix and rent projects, properties which house businesses, restaurants, retail stores and more.

The Benefits of Fix and Renting

The biggest advantage of holding a property to rent is the monthly income that can be earned from tenants, including extra fees for parking, utilities and more. There are also significant tax advantages to owning a fix and rent property – expenses such as loan origination fees and more can be written off along with many other deductibles. With this kind of investment, the tenant effectively pays off the investor’s loan, which increases the investor’s equity, and once the loan is paid off the investor gets to pocket the money as profit.

Selling real estate can be a particularly challenging and drawn-out process – contrastingly, fix and rent homes are a safe bet in most markets as they are less sensitive to market downturns. The equity the investor has in the property can also be used to get other home equity loans or lines of credit that they need.

Finding a Perfect Fix and Rent

As with other real estate investments, the key to buying a fix and rent is selecting the right location – mostly working-class and middle-income neighborhoods, as this will have a direct impact on the standard and availability of tenants. It’s key to not to buy a good property in a bad location, no matter how good the deal seems, as there will be little chance of appreciation and the property won’t be as attractive to buyers either. Similarly, some luxury-type properties can become too expensive to manage in upkeep and cost more than they are ultimately worth.

It’s also worth noting that real estate experts advise investors to purchase properties within their own geographic locations, that they are most familiar with. This helps the investor be sure of whether the property is located close to the amenities that buyers want and eases management if they are personally looking after the property.

Fix and rent properties are a dependable and steady source of income for the investor. This popular investment strategy is common amongst newer investors, as many aspects of management can be outsourced and are safer than other similar types of investments. Fix and rent properties hold a few benefits for the investor, including tax breaks, increased equity and much more. 

Finding the perfect fix and rent property comes down to finding a home in a great location, doing due diligence and creating a valuable space to potential tenants.