If you’ve been looking for a new home, you’ve likely come across some listings that describe a property as “needs a little maintenance”, “huge potential” or “renovator delight”. These descriptions fit a fix-upper house perfectly.
In real estate jargon, a fixer-upper is a home that requires some serious repairs and renovations. There are some advantages to buying such a property, but you also need to carefully consider a number of factors as a misjudgment can lead to major pitfalls.
If you are unsure whether buying a fixer upper home is the right step for you, this guide can help you make a decision.
What Are The Benefits Of Buying A Fixer Upper Home?
There are several reasons homebuyers may find a fixer-upper appealing. Here are some of them:
1. Lower purchase price
Fixer-upper homes typically sell below market value so they can pave the way for you to get on the real estate ladder earlier. You can also negotiate the price depending on how the building and pest inspection goes and how long the property has been on the market. If you’ve saved enough, you may not even need to take out a home loan.
2. Welding property
Any improvement or renovation you do should add to your home’s equity. That means that the repairs and upgrades you make must add to the value of your property. Building equity can be to your advantage, especially if you are planning to refinance your mortgage or sell your home for above market value.
However, if you are buying a fixer-upper to sell later, you need to make sure you are not investing too much capital on your renovations. If you go overboard with your upgrades, the value of your property can well exceed what buyers are willing to pay for living in your area.
3. Possibility of personalization
Buying a fixer upper house gives you the opportunity to put your personal stamp on the property, which can be very worthwhile. This works especially if you are looking for an apartment. However, when buying a fixer-upper as an investment, it pays to be more conservative in your style choices, as what is attractive to you may not be attractive to potential buyers.
What are the downsides to buying a Fixer upper?
Despite the potential benefits, there are drawbacks to purchasing a fuser face, including:
1. Time consuming renovations
A fixer-upper comes with a great deal of commitment because home renovations take a lot of time and effort, even if you use the services of professionals. You need to be available at all times to answer questions or give you instructions on how to complete certain tasks. You will also need to select the materials and fixtures and coordinate their delivery, especially if you choose not to hire a project manager. Renovations can take even longer if you do the job yourself. The key here is to set a realistic timeframe and have the foresight to anticipate potential problems.
2. Unexpected repairs
While an outdated kitchen or bathroom is easy to spot and replace, structural issues aren’t – and they can easily consume your budget. For this reason, performing a building and pest inspection is a must before purchasing a Fixer upper. They can let you know in advance if the property is worth the time, effort and money. Here are signs that a house can have severe structural damage:
- Cracks in the foundation or masonry
- Discolored, peeling, or bubbly paint that could indicate water damage
- Undersized framing in roofs or floors
- Sagging in roof lines, floors or outside walls
- Termite damage
- Signs of mold
3. Buyer’s remorse
Renovating a fixer-upper can also be mentally and emotionally demanding, especially when problems and costs start to rise. Some homebuyers are not designed to handle the stress that comes with taking on a large project.
What Factors Should You Consider Before Buying a Fixer Upper Home?
To find the right fixation upper, you need to plan and prepare accordingly. Here are some of the most important factors to consider:
1. Renovation costs
The goal in buying a fixer upper is to get a property that is worth more than you paid for. While you can buy the house at a much lower price, you also need to consider the cost of renovations and repairs. When planning your budget, it is advisable to allow between 10% and 20% buffer for unexpected repairs.
2. Location
See what amenities are near the home. Are there schools in the area? Are retail stores and other lifestyle facilities easily accessible? Is the property on a busy main road? If the fuser upper is in a desirable location, it can be worth the money.
3. Good bones
In real estate jargon, “good bones” is used to describe a fixer top with structural, electrical, plumbing, and mechanical systems in good condition. The building inspection report can show whether the property you are looking for is structurally sound.
4. Local and municipal regulations
It is also worth checking which renovations are approved by the local council. For example, some municipalities do not allow house extensions or facade changes. There may also be restrictions on which trees you can remove from the property. If your plans include any of these, it is best to find out in advance that it conforms to council regulations.
5. Timeframe
Consider carefully what renovation work you are doing and how much time and effort it will take. This will help you set a realistic timeframe for when you can move in or bring the property to market.
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