Many home buyers consider a fixer-upper as their first home. The initial cost of a fixer-upper tends to be more affordable than a move in ready home. Though fixer-uppers can often cost more in the long run. Unforeseen costs and cost overruns can quickly use up a budget and much more. Buying a fixer-upper can be a great way to buy more house than a first time home buyer could afford otherwise, but great caution should be exercised. There are several factors to consider before buying a fixer-upper.
First and foremost is patience and temperament. Living in a home that is under construction takes patience and a good personal temperament. A person that likes things a certain way and likes things done yesterday should probably avoid a fixer-upper. A person that takes joy from small but steady accomplishments and does not get upset with unforeseen setbacks or obstacles could be a good candidate to purchase a fixer-upper.
The next thing to consider is just how handy the buyer is, really. It is important to be honest. Most people consider themselves somewhat handy, but really are not. If a buyer cannot patch a price of sheetrock, change an electrical fixture, or unclog a drain, they should not consider a fixer-upper. On the other hand, if a buyer owns a circular saw and knows how to use it, a fixer-upper might be a good choice.
Friends and family that work in the trades (painter, plumber, electrician, builder) or are just good with tools can save buyers a great deal. It is important to ask how much they are willing and able to truly help before buying a fixer-upper. A plumber that works a 50 hour week may not want to come over and work on a bathroom on Saturday. Having willing and able friends and family can make a fixer-upper a good deal.
How much savings is available for repairs? Repair budgets move upward much more often than downward. Is the money needed to complete the repairs that need to be done available? Anticipate unforeseen problems and rising cost to be at least ten percent more than the original budget. Getting estimates for needed repairs before purchasing can help buyers understand whether or not a fixer-upper is the right choice.
There are several other factors to consider at that point before making the plunge. Many buyers are on a tight budget and don't have a lot of money to spend, but want to live in a nice area. Location is more import than the house itself. The house will change, the location will not. A fixer-upper is a way to get into an area that a buyer might not otherwise afford. A good location is necessary in order to turn your effort into a sound investment. If a buyer can afford a move in ready home in the area they desire, a fixer-upper may not be necessary.
Another consideration is how long the buyer plans to live in the home. Renovations take time. Homes under renovation are hard to sell. If a buyer does not plan on living in the home for several years, a fixer-upper might be a poor choice. There is money to be made in a well done fixer-upper, but there is a lot of money to be lost if the home has to be sold before the renovations are done.
The last thing to consider is whether the issues with the fixer-upper are cosmetic or structural. Cosmetic issue can be lived with and corrected over a period of time. The 1970s wallpaper in the den might not be desirable, but it can be changed next year. A structural problem must be dealt with or may result in larger issues. A leaky foundation can lead to mold. Structural problems tend to be harder to correct and more difficult to estimate the cost of the repair. Buyers will be best served by avoiding fixer-uppers with structural problems.
If you consider all of the above and are a good candidate for a fixer-upper, make sure you do your diligence, avoid structural issues, and chose a good location. This will go a long way towards building a solid investment in your home. Good luck and happy hunting.
Rick is a realtor, real estate author, and a long time Windham resident. You can contact Rick with all of your real estate needs and questions at Rickyost@kw.com