All buyers are looking for the same thing – a good deal. That holds true for those buying real estate as well. While some buyers will only accept a home that’s move in ready, others may be willing to overlook a few faults- especially if that means getting a bargain price on their new property. Before you seek out a fixer-upper, with plans of saving lots of money, it’s important to remind yourself that fixer-uppers do need to be fixed- and that’s going to take time and money to accomplish. Whether you’re planning to move into this home yourself, planning to use it as a rental, or are hoping to flip the property once it’s market-ready, you need to adhere to a few major considerations before jumping head first into the project. While HGTV and social media personalities might lead you to believe that fixing a fixer-upper is a quick and easy process that even an amateur can handle, the truth is that it’s a big undertaking- much larger than most consider. There’s a reason why you can often see half-completed projects being relisted on the market- people can run out of funds, or just get frustrated with the process.
While it isn’t for everyone, by making a smart initial purchase and then doing things right, buying and improving a fixer-upper can be a rewarding – and lucrative – proposition for those with the right skills, contacts, and disposition. Here are five key points you should keep in mind at all times.
- Not all fixer-uppers are created equally! Finding the right property to begin with is key to success. While nearly any home can be brought back to a high standard, depending on the necessary work required, that could mean overhauling the entire home, essentially rebuilding the entirety of the home both inside and out. When looking for a good candidate, look for properties that are in need of a little cosmetic TLC, while still being in good structural condition. Foundation and structural concerns should be major red flags you avoid when selecting which homes to consider. While these problems can be addressed by a licensed and experienced contractor, it will be a lengthy and pricey process to get it done properly.
- Understand your own limitations. A home in need of small cosmetic repairs can be tackled by someone with limited experience, basic tools and equipment, all while staying on a small budget. With fixer-uppers, there’s always the chance that there may be more – and more significant problems – under the surface. While a project might look like something you can manage on your own, it’s important to remember that sometimes, you’ll need help from the professionals. Trying to work above your experience and skill level could mean causing damage to the home.
You’ll also want to consider your budget closely. Always estimate expenses higher than you expect when deciding if you can afford something. You don’t want to end up out of money or in debt due to your side project. Professionals need to be paid, and materials can be expensive. Don’t find yourself stuck, unable to get the work you need done, tying up all the other money you’ve already invested.
- Find Professionals you can trust. From your real estate agent to your home inspector, all the way down to the contractors and landscapers- many hands will come together and play a part in making your fixer-upper house into a home. Carefully vet each member of the team before hiring them. Find licensed and insured professionals who take pride in their work, value good communication, and have past experience and referrals to prove that they can get the job done – not only to your standards, but on budget and on time.
- Understand your investment. Purchasing any home is an investment, but in the case of a fixer upper, you’ll be investing even more capital as time goes on. If you plan on living in this home, you really only need to consider- at the end of it all, do you have a good home at a reasonable price? For those looking to receive a passive income from the property, or are hoping to flip, you need to consider much more: Is the property in a good location to attract the renters or buyers you’re looking for? “Up and coming” areas might seem like an appealing prospect for those looking for a bargain, but don’t buy into the marketing hype- these areas may not offer the sort of amenities or quality of life you’re really looking for. Unless you’re willing to hold onto the property for an extended period of time, you may never get a return on your initial investment. As a general rule, the best bargain home is whatever you can afford in a good neighborhood. Good neighborhoods will always improve the value of a home, and typically see a greater increase in value over time, when compared to a home in less desirable areas.
- Know the law. Before committing to a purchase, it’s a good idea to do some research to better understand the legal aspects of home ownership in an area. Regulations can vary from neighborhood to neighborhood, sometimes even block-to-block. Building codes, permitting requirements, and zoning are all major factors that need to be considered- and just another reason why it’s a good idea to work with professionals who have a good understanding of how the law might impact their jobs. If your grand plan is to build an extension on the home, you’ll want to make sure you can legally build that addition before getting started.
Fixer-upper homes are popular for many reasons, and can be a rewarding project and smart investment opportunity. You don’t need to be a master carpenter or a real estate guru in order to succeed: you just need to perform some careful analysis and make the right decisions as you work through the process. Finding the right property that suits your goals and capabilities might be a search- but it’ll be worth it when you’re able to make a home that’s truly your own!
