Purchasing a Fixer Upper: Things to Consider Before Buying

By in Home Selling Tips with 0 Comments

On television today, there are so many different fixer upper shows that it is hard to keep track. With these shows growing in popularity – show hosts taking that beaten up old home on the corner and turning it into their clients dream home – the purchase of fixer upper properties around the country have become increasingly common. Who doesn’t want to buy a home for pennies on the dollar and turn it into the home they’ve always dreamed of while still remaining under their budget?

However, when it comes to purchasing a fixer upper home, not all of them are created equal. While some offer the opportunity to create your dream home while also having a ton of appreciation, other fixer uppers become monster projects that do nothing but steal your money (ever seen the movie “The Money Pit”?). So, how do you know the difference?

Here are some issues to think about first when considering buying a fixer upper home.

  1. Is the home in a bad neighborhood?:

There’s a saying in the real estate industry that states, “Location, location, location,” which is why this is the number one thing you need to consider when purchasing a fixer upper. On the television network HGTV’s website they state, “When it comes to renovating, almost anything can be done if you’ve got the budget, but there’s one thing you’ll never be able to change – location. If the house is located next to a sewage treatment plant or in a high-crime area, it doesn’t matter what you do to the property, it’s automatically unappealing to most buyers.” While you might see the potential in the home, you always have to think of resale, or what living would be like in the home if you are purchasing it as an investment property. Would another person want to buy or rent in that area/neighborhood, or say for example, in a flood area? If the answer is no, then it’s probably not a good idea for you to either.

  1. Is the home structurally sound?:

This one seems like a no brainer, but you would be surprised. When it comes to fixer uppers, a general rule you want to follow is making sure the home’s structure is more or less intact. There is a very large difference – in money – between some new cabinets and fresh coats of paint, and a home in such disarray that you move from a home makeover to a major home renovation. Forbes magazine said it well when they said, “If the home has structural or foundational issues, but the ‘lipstick on the pig’ looks good, then it’s too good to be true.” One idea is to bring along a home inspector with you to look at properties if you’re looking at fixer uppers. Though this might cost some money upfront, it could also save you a lot of money in the long run if they unearth any large structural issues.

With a fixer upper, there may also be larger ticket items that need attention like replacing the HVAC unit, putting on a new roof, or updating the plumbing. None of those are terribly horrible like a faulty foundation or structure, but are still more costly. So, make sure you ask yourself how far you are willing to go in renovating whatever fixer upper property you end up purchasing. Are you looking for that home in need of minor upgrades such as flooring and cabinets, or are you okay with a larger renovation project?

  1. Will the cost of renovating the home be too great to make a profit?:

If you’re looking to buy and flip a fixer upper in order to resell and make a profit, this is definitely something you need to be thinking about! For example, if you buy a home for $150,000, put $50,000 worth of renovations into it, but can only sell the home for $190,000, then you are out 10k on that project, not to mention closing costs! On top of that, you have to look at other homes in the area. What are they selling for? Will the amount of renovations you want to do to the home, and therefore the price at which you need to list in order to remake that money, be too expensive for that neighborhood? If so, then you might end up having to sell for way less than what you were originally asking for and what you need to profit in order to get your money back.

 

If you’re looking to purchase a fixer upper home either for yourself, or to flip and resell, these are just a few of things you should think about first. Fixer Upper home projects can be great! You get to create the home you’ve always wanted, or flip a home to make it a dream for someone else while making a profit for yourself, but don’t forget to use caution!

In this next fixer upper adventure we wish you happy hunting and good luck!

Share This

Leave a Reply

Your email address will not be published. Required fields are marked *