WHAT IS A FIXER UPPER?

The first question is what exactly is a fixer-upper? A fixer-upper is a house that has been poorly maintained and has a lower market value than other houses in the immediate area. The second question is where are these houses? You can find distressed properties or fixer-uppers in most communities, even healthier neighborhoods.

Deciding whether a fixer upper is a wise investment takes some work. You need to figure what the average house in a given area sells for, as well as what the most desirable houses in that area are like and what they cost. This is where a real estate agent will be of great service to you.

If you take this route you should try to find a "cosmetic fixer" that can be completely refurbished with paint, wallpaper, new floor and window coverings, landscaping and new appliances. You should avoid run-down houses that need major structural repairs. A house price that looks too good to be true probably is. A smart buyer will find out why before buying it.

The smart move is to find the least desirable house in the most desirable neighborhood, and then decide if the expenses needed to bring the value of that property up to its full potential market value are within your budget.

Most recently, the highest remodeling paybacks have come from updating kitchens and baths, home-office additions and extra amenities in older homes. While home offices are a relatively new remodeling trend, for example, you could expect to recoup 58 percent of the cost of adding a home office, according to the survey.

Also keep in mind that 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.

If you are interested in investing in this type of property put your realtor to work. Use his or her expertise in locating the area, locating the house and doing a market evaluation.

Before starting any major renovations on your home, it is important to look at what renovations will give you the best return on your investment. The following is a list of industry averages.