Should You Consider a Fixer-Upper?

It can be very tempting to buy a fixer-upper home if you live in a competitive real estate market or if the price is too good to pass up. For some they’re a great investment; for others they can come with a ton of unexpected challenges. If you’ve entertained the idea of buying a fixer-upper, consider the items below before you make your final decision:

Scoping and Budgeting

Assess the scope of the renovations required for the property. Cosmetic issues may be far easier to address than structural repairs. Before you sign anything, understand the true cost of renovations. Get estimates from contractors for the repairs and upgrades the property’s going to need. Budget not only for the purchase price but also for the renovation costs, which can often exceed initial estimates.

Inspection and Time

A comprehensive home inspection is crucial. This will reveal underlying issues that may not be obvious during a showing. It helps in understanding the full extent of necessary repairs and ensures there are no major surprises post-purchase. An inspection will help you understand the true scope of the project at hand and what you’re potentially getting yourself into. The inspection will also help you understand the time and effort needed to renovate the property, helping you determine whether you have the bandwidth to manage the project yourself or hire professionals.

Location and Resale Potential

Consider the location carefully. Even if you renovate the home beautifully, the neighborhood and surrounding amenities will affect its resale value. Research the area’s market trends and future developments. Is the area expected to grow, or are people moving away from it? Is it in a good school district? Is the local community involved or is the area not doing so well? All of these items can impact a property’s resale potential.

Legal and Permits

If you’re going to buy a fixer-upper, you need to understand local zoning laws and building codes. Certain renovations may require permits, and failing to obtain them can lead to fines or complications down the line. Ensure all renovations are done legally and up to code – the last thing you want is to start a large renovation project only to realize that all the work that’s been done won’t pass inspection and you have to start over.

Financing and Hidden Costs

Before making an offer explore financing options suitable for fixer-uppers. FHA 203(k) loans and renovation loans are tailored for such properties, allowing you to finance both the purchase and renovation costs in one mortgage. But you also need to factor in contingency funds for unexpected costs. Renovations often uncover hidden problems that weren’t apparent in the beginning. Having a buffer in your budget can alleviate stress and financial strain.

Skills and DIY vs. Contractors

Now is a great time to know your strengths and weaknesses. Assess your own skills and comfort level with DIY renovations. Some tasks may be feasible to do yourself, but others may require professional expertise. Be realistic about what you can handle versus what should be outsourced. You may be able to paint a room or install a new faucet, but do you have the expertise to replace windows or hang sheet rock? Know your limits and plan accordingly.

A fixer-upper home can be a fun project – but you have to be prepared. By being well-informed and understanding what you may come up against, you can navigate the challenges of buying a fixer-upper successfully and turn it into a rewarding investment or dream home.

Local real estate markets are seeing movement across the U.S.; you can find out what’s happening in your city through my website below: I’m happy to get you set up with a real estate market report for your current market, or a brand new market, just ask! Don’t hesitate to reach out today!