Fixer Uppers: The Good, The Bad, & The Ugly
If you’ve turned on the television anytime in the last decade, it’s likely you’ve stumbled upon a home improvement show dedicated to rehabbing fixer-uppers. It usually goes something like this: a cute couple buys a home in need of some major renovations. They call in the experts, encounter at least one unexpected/ serious issues, pick out some new hardwood, modern furniture and a few throw pillows, and voila! In just 30 short minutes the eyesore-with-potential is magically transformed into the star of the neighborhood.
Most of us understand that fixer-uppers are not that easy, but what are the most important considerations for homebuyers who are thinking about tackling a large project?
If a fixer-upper is in a desirable location where schools are excellent and the real estate market is healthy, the rehab-risk lowers immediately. Your mortgage loan officer and real estate agent can help you focus your search on fixer-uppers in neighborhoods that are safer bets for sinking some serious time and cash into.
On many DIY shows you might hear the phrase “look for a home with good bones.” Ask yourself the following questions: does the house have nice curb appeal? Does the interior flow easily from room to room, or are the rooms tiny? Is there custom woodwork, a beautiful stairwell or other unique features that set the home apart? Look for anything that you know will save you time, labor and cash.
All fixer-uppers are going to have issues, some serious. The question ask yourself is, how much of a renovation is too much? Know what problems you’re willing to tackle before getting too deep into the house-hunting process. As you work with your mortgage loan officer and real estate agent, discuss the projects and issues you’re comfortable with, and those you aren’t.
More importantly, a qualified home inspector can tell you whether a home has hidden structural issues, or plumbing or electrical problems. Any one of these can require a lot of cash, but if the home as all three, a renovation could get very expensive, very quickly.
If you know for a fact that you will be tackling a large and costly project, add another potential large fix into your budget. If the cost is more than what you would pay for a similar house in better shape, either move on or lower your offer.
Remember your return on investment. Calculate the potential ROI, and be certain it fits into the current growth market of the neighborhood. Some renovations will add a lot to ROI, while other fixes can be costly without adding much value. Keep the bigger picture in the back of your mind, and make sure you don’t price yourself out of the neighborhood!
No matter what you decide, be real with yourself and your ability to take on a fixer-upper. Both your mortgage loan officer and real estate agent can help navigate you away from a potential money-pit and into the home that will work for you and your family.
Have you tackled a fixer-upper? We want to hear about it! Tell us in the comments.