Should You Buy a Fixer Upper?
Some people simply love the thought of getting an old home that comes with a character and history and turning it into their dream home by making the necessary improvements as per their liking. Others, however, dread the mere notion of going through the long, tiring process of renovating an old, run down place and simply prefer a turn-key solution.
A simple question that sounds very straightforward but is actually the most important one before buying a fixer upper is, whether you like a new home or an old one. Yes, this is what it really comes down to. If your answer is an ‘old home’ then there are a few more things to consider before you decide to invest your hard earned money on your purchase. Before investing in a fixer upper, make sure you are able to take on the needed renovations while still staying on budget.
Investing in a Fixer Upper
Consider your budget – In order to determine what price you should pay for a fixer upper, it is important to estimate the costs of renovation and repair you will be spending. The cost of labor and materials should be added up. If the house requires major repairs such as electrical system overhauls and foundation upgrades, it is best to look for something else as the repair costs for these will likely not add any value to the house’s price.
Location – Location, location, location is heard many times in the real estate market and rightly so. If you are buying a fixer upper in a noisy street or close to commercial or industrial property, it is best to avoid these areas since they are likely to be low maintenance areas with chances of your property ending up in the same shape soon after you renovate it.
Home Layout – If the home has a bad layout, it may not be worth it to spend time and money just to make it look more attractive. A badly located kitchen or children’s bedroom on the opposite ends of the home are not something that can be fixed no matter how much you spend.
Home Condition – The ideal homes are those that require cosmetic improvements such as paint touchups, floor repair, drywall repairs, doors, lighting, and bathroom upgrades generally provide a greater return of investment. According to the National Association of Home Builders, repair and renovation costs should not raise the value of your fixer-upper home more than 10-15% above the median sale price of your neighborhood.
Fixer Upper Homes
Investing in a fixer upper home can have a high risk, but also a high reward in the long run. Once you do the math and calculate how much renovations will cost, add at least 10 percent as a buffer for add-ons or unforeseen problems, and take inflation into account, then you can estimate what your offer should be at. Stay away from properties with major structural damage or those in need of major repairs such as plumbing, electrical or foundation fixes unless you are willing to take on the project and price. Fixes that provide the best value in a fixer upper include:
- Stripping wallpaper and painting
- Refinishing of floor or new carpeting, tiles or lamination
- Improved lighting
- New kitchen cabinets or polishing the old ones
- Replacing doors and windows
- New exterior paint job
What to Know Before Buying a Fixer Upper
Get a home inspection before buying a fixer-upper – When opting to buy a fixer upper home, you should get the following inspections before finalizing anything in the purchase contract. For some of these you can ask the seller to pay for the inspection fees.
- Roof certification
- Pest inspection
- Sewer line inspection
- Engineering report
All in all, a fixer upper can prove to be a great investment provided you are well prepared and ready to invest the time, effort and money on your home. For more information on what to look for when buying a fixer upper, contact our skilled real estate professionals today!