You may have seen the DIY shows and been totally inspired. Completely inexperienced homeowners buy a home and turn it into a dream palace. Sometimes. Other times it becomes their worst nightmare. Whether you’ve never picked up a hammer or you’ve had a long construction career under your belt, buying a fixer-upper can be a great investment or it might turn out to be more than you bargained for. How do you know if it’s the right choice for you?
Why People Choose Fixer-Uppers
The lower price tag that often comes with a fixer-upper can be quite tempting. It may seem like a more affordable or the only affordable option in certain desirable neighborhoods. Some fixer-uppers are just old and out of date, nothing more than some fresh paint and cosmetic fixes (or so it often seems).
Others like the idea of being able to totally customize a home without having to build from scratch (which can be a more expensive project). A total gut of the home leaves owners with an almost blank slate to work with, giving greater leeway to create a dream home exactly the way they imagined.
Some business savvy owners see fixer-uppers as a good investment. Being able to buy a home below the market value of others in the neighborhood and then turning it into a gem (sticking to the right construction budget). They may be able to significantly increase the value of the home, leaving them with a nice nest egg of equity.
Factors That Should Be Taken Into Consideration
Whether to buy a fixer-upper or not is a big decision and one that shouldn’t be taken lightly lest you find yourself in over your head. Use these questions to assess whether a fixer-upper is the right move for you.
1. What is the Scope of the Work?
At first glance, it may seem that a few coats of paint and some updated décor will do the trick. It’s important to not only look deeper but play out the next steps through to the end. Once you have fresh paint on the walls, are those cabinets going to look too dingy? Once you have new cabinets, will those scuffed floors become more noticeable? And so on.
It’s not only the cosmetic assessment that needs to be made, but whether there are more serious and costly repairs that are necessary. If a home is older, will it require electrical, plumbing, framing, etc. to be brought up to code? Is there the possibility of lead paint, mold, asbestos, or other dangerous materials that need to be removed with special care?
Every house has the risk of turning into Pandora’s box, but having a realistic view of the scope of work will help prevent unwelcome surprises. This means you may want to go back and look at the home multiple times to see things you may not have previously noticed, or bring a professional with you to help make a proper assessment of the scope of work needed.
2. Will it Strain You Mentally and Emotionally?
Regular life is stressful, buying a house is even more stressful, but adding a renovation on top of it? You may thrive on projects and high-pressure situations like these, or they may overwhelm you. Ask yourself whether you are ready to commit to a project that will require plenty of time, decision-making, and mental and emotional (and possibly physical) energy.
3. Where Will You Live During the Renovation?
Oh yeah, that. It will be wonderful if you can time everything just right, but what if your timeline doesn’t quite work out the way you had planned? What if the renovation runs longer than you thought it would (a very distinct possibility)? Are you willing to wade through sawdust every morning just to get to the bathroom? Are you okay with having nowhere to prepare food and eating on makeshift sawhorse tables? If you aren’t able to temporarily move in with family or friends, living in a hotel or short-term rental is a good alternate plan. It just requires you to have some wiggle room in your financial and emotional budget for the expected and unexpected.
4. Who Will Do the Work?
As we talked about during the outset of this article, you may have seen shows with complete newbies breaking open the package on their first tape measure and diving into an involved renovation project. Is it realistic? That depends on you.
Ask yourself: Are you willing and realistically capable of doing the work? If your answer is yes, that’s terrific! But if your answer is, “Heck, no. That’s why I’ll hire people!”, that is a perfectly reasonable response as well.
If you are going to hire out the work to professionals, do you have connections to reliable contractors? This might include architects, electricians, plumbers, and other tradesman. Hiring the right people is important to not only getting the job done correctly (including making things up to code and passing inspections), but getting it done on time. You want to find contractors who are efficient, budget-minded, and are able to get you good prices on appliances and materials for your fixer-upper.
5. Do You Know What You Want?
This requires vision and it’s important to ask yourself if you truly have it (it’s not a gift all possess). Unless you have unlimited time and money (we wish), you need to be able to envision exactly what you want for your fixer-upper and stick to your plan (with reasonable flexibility). This means using some imagination and creativity, especially in homes that might require some creative solutions. Professionals will be able to help you to some extent, but you want this to be your dream home, not theirs.
If you don’t have the time or emotional energy required to put together a plan for how you want your home to look, you might want to consider a home that requires less work for the time being.
Turnkey vs. Fixer-Upper
When real estate agents talk about turnkey, they are referring to homes that are move in ready. They may not be custom tailored to your exact specifications, but there would be nothing to prevent you from moving into your fully functioning home. You may pay more for a turnkey home, but you can think of it as having a renovation budget built into the price and the work is already done.
A fixer-upper is usually less expensive, at least initially, but can be somewhat of a question mark in a lot of areas. The amount of work, time, and money needed to make it anywhere from livable to your dream home can vary widely. The upside is that you basically get a custom home and you may end up with lots of positive equity after improving the value.
When considering a fixer-upper, it is important to look at not just the initial price but the total cost to you once all the renovations are done. Factor that in when making an offer on the home, allowing you to stay on budget and enjoy the process.