How Entrepreneurs Create Passive Income with Fixer-Uppers

by | Mar 16, 2023

Thanks to popular TV shows and YouTube videos, fixer-uppers have gained a significant reputation in recent years. But are fixer-uppers wise real estate investments? Is it possible to build a rental property portfolio with them? Today, we’ll answer these questions and more so you can decide for yourself whether to invest in a fixer-upper home.


What Are Fixer-Uppers?

If you’re not familiar with the concept, fixer-uppers are simply homes that need exactly that … fixing up. Since they need extra work and TLC to make them livable or attractive to buyers, savvy real estate investors can purchase them at a discount price. What’s done after the purchase will significantly affect how profitable the investment actually is.


Many investors use the popular fix-and-flip real estate investing strategy to turn a profit. The concept is simple. First, find a fixer-upper with lots of potential. It should be located in a decent neighborhood and be situated on a nice piece of property. Then, hire a reputable contractor to do the repairs necessary to increase the home’s value. Lastly, work with an experienced real estate broker to sell the home for a price that’s significantly higher than your original purchase price plus the cost of repairs. 


Real estate investors that follow the fix-and-flip strategy can make decent profits if they know what they’re doing. The problem is that in order to keep making money, they have to keep fixing and flipping. This takes a lot of time, energy, and WORK. Is there an easier way to use fixer-uppers to make money? YES!


How Entrepreneurs Create Passive Income with Fixer-Uppers

If you’ve been around me for very long, you know that I’m passionate about helping entrepreneurs turn earned income into passive income. After all, earned income will only get you so far in life. It’s passive income that can really make magic happen and set you up to enjoy financial freedom for the rest of your life.


Now, let’s look at how business owners can utilize fixer-uppers to create passive income and build wealth.


1. Entrepreneurs use their businesses to grow their income.

In order to get the money to invest in real estate, entrepreneurs grow their earned income by growing and scaling their business. What’s the easiest and fastest way to do this without making costly mistakes? Work with an experienced business coach who’s been there and done that.


2. Entrepreneurs use their increased revenues to invest in real estate.

Business owners who follow my wealth-building blueprint know that there are three key steps they must take with their money. We’ve already talked about the first step: earning money (lots of it). The next step is to save and protect that money until there’s enough of it to start investing in real estate. Now, we get to the third and most enjoyable step: multiplying money.


Remember how a business coach can help entrepreneurs grow and scale their businesses easier and faster? The same is true in real estate. Working with a real estate investing coach or mentor can help entrepreneurs know where and how to start as well as what to do along the way.


3. Savvy entrepreneurs use fixer-uppers to grow passive income.

If you want to keep earning income, you can keep building your business or buy and sell fixer-uppers with the fix-and-flip strategy. But, if you want to start growing passive income, you can use fixer-uppers in a different way.


To create passive income with fixer-uppers, you’re going to want to purchase real estate that you will fix and rent, not fix and sell. The rental payments coming in month after month, year after year, are what will leave you with passive income that can even lead to financial freedom.


Steps to Create Passive Income with Fixer-Uppers

In order to grow your wealth, you must know what type of fixer-upper to look for and what to do once you find it. Ideally, you’ll want to find an undervalued fixer-upper that has tons of potential and is in a great neighborhood. It could be a single family home, a multifamily unit, or even an apartment building with lots of units.


The idea is that the current condition of the real estate drives the purchase price down so you can buy it at a steal. Then, you can pay for the needed repairs that will drive the potential rent up. Ultimately, you want to ensure that the rent you’ll be able to charge after repairs is consistent with the market the property’s in AND allows you to easily recoup your expenses PLUS provide you with funds left over.


If you want to see exactly how this process works, watch this video where I explain how my wife and I bought an apartment building for $660,000 and turned it into an investment appraised at $1,000,000: Making a $660K Apartment Worth $1,000,000.


Or, watch this video to see how we’re growing our passive income by fixing up a fourplex and duplex: Real Estate Investing: Upgrading a Fourplex and Duplex!


Lastly, if you want to learn how to use real estate investing to achieve financial freedom so you can live life on your own terms, check out my e-book, The New Rules for Financial Freedom. If my wife and I can do it, you can too!

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