When it comes to purchasing a home, no matter it is your first, a new home or just an investment property, fixer-uppers can be a great option. However, when investing in a fixer-upper, there are some things you should certainly keep in mind. In some cases, it may not be the best time to buy in the area, while in others a home may need extensive renovations, making another home a better investment for you and your family. Here are a few things you should know before you decide on buying that fixer-upper:
Before you invest in a fixer-upper, it is best to know exactly what you are buying. Many buyers think that if everything “looks” good, the house is in good condition, but this, sadly, is far from the truth. Investing in a thorough, professional home inspection will allow you to know whether any issues exceed your renovation budget or make the home not a worthwhile investment. Certain renovations such as foundation issues, mold remediation, and even plumbing can be extremely costly renovations that don’t yield much value when trying to resell.
Most people who purchase a fixer-upper intend on using a contractor for some if not all of the renovation projects. When estimating renovation costs be sure to request estimates that include materials needed and labor costs. We recommend adding 5-10% on top of the estimate to account for any problems that could occur during the project.
Timing can be extremely important when it comes to real estate. If values of the homes in the area you are looking to purchase have peaked, the fixer-upper you purchase may not retain value, potentially causing you a loss if you sell down the road. Areas with inflated values tend to flatten out over time; you’ll end up having to wait for the market to bubble again before you can make a profit.
Taking care of some of the home renovations yourself can save you quite a bit of money overall. It is important, however, to be realistic about the projects you plan on taking on. Renovation takes precision, experience, and knowledge, making a professional renovation a great choice. If renovations are not done correctly, you will end up wasting time, money and materials as prospective buyers will consider these factors.