Buying a Fixer-Upper: Should You Do It? Part 1
Buying a fixer-upper is a lot like a rollercoaster. It’s exhilarating and stressful. There are ups, downs, twists, turns, and lots of surprises. You feel both invigorated and exhausted when it’s all over. And everyone loves to brag about how they did when the ride is over.
Buying a fixer-upper is not for the faint-hearted. Repairing a fixer-upper is a long-term commitment with many factors and moving parts—namely time, labor, costs, materials, and your personal limits.
If you’ve been playing with the idea of buying and remodeling a fixer-upper, keep reading. In this first part of our fixer-upper series, we weigh the pros and cons of purchasing a fixer-upper. We offer key considerations and invaluable advice to help you decide whether or not buying a fixer-upper is the right choice for you.
What Is a Fixer-Upper
A fixer-upper is an old, outdated house in dire need of structural repairs and/or style updates. A fixer-upper may have moderate to severe damage to one or several systems, like structural, electrical, plumbing, irrigation, and more. A fixer-upper usually has one or more building code violations, which can make modern repairs tricky. It is not uncommon for a home like this to remain on the real estate market for long periods of time.
Purchasing and repairing a fixer-upper is a huge endeavor. Working on a fixer-upper requires extensive planning, spending, negotiating, and managing. Not to mention overseeing job sites, making back-and-forth phone calls, and handling stress.
Be warned: remodeling a fixer-upper means juggling a lot of variables over a long period of time. When it comes to fixer-uppers, the more you know, the better. You’ll want to inform yourself as much as possible before you purchase a fixer-upper home.
Why Buy a Fixer-Upper
That being said, there’s a lot of appeal in buying a fixer-upper home. The reasons why someone would want to buy a breaking or broken-down home include affordability, investment opportunity, and freedom of customizability.
For those looking to purchase inexpensive real estate, fixer-uppers offer tremendous opportunities. Buyers have a lot of leverage when it comes to negotiating the sale price of the home. Fixer-upper homes are priced low to sell quickly, especially if they have been listed on the market for a long time.
And if the house has little to no buyer interest, buyers can lowball the asking price by delineating the time, effort, and money it will take to make the home habitable.
And for first-time homebuyers with tight budgets, fixer-uppers can be a real-estate steal when paired with a first-time homebuyer loan.
Fixer-Uppers as Real Estate Investments
For those interested in profiting from the appreciation or rentability of a newly remodeled home, fixer-uppers are attractive investments. To real estate investors, a fixer-upper is a golden opportunity to flip a rundown home into a trendy investment property that is rentable or sellable.
If you’re able to keep remodeling costs low and the project length relatively short, you can make a huge profit flipping fixer-upper homes.
Take, for example, a crumbling and outdated home among a neighborhood of nicer and newly renovated homes. Before remodeling, the fixer-upper in this situation could sell for tens of thousands of dollars less than its neighboring homes. After remodeling, the home could appreciate and sell for the same price or more than its neighboring homes.
Fixer-Upper Pride and Customizability
The imagination that a fixer-upper spark is one of its biggest selling points. People love imagining what could be. They love picturing themselves in a modernized home, designed by them and seemingly perfect in every way.
To ambitious homebuyers, a fixer-upper is a challenge. It is an extension of the American dream, an invitation to build one’s ideal home.
For others, rebuilding a fixer-upper is a matter of pride. Some people enjoy working with their hands. They like to take old things and make them like new.
The Advantages of Buying a Fixer-Upper
There’s no doubt fixer-uppers are a lot of work. But we would be remiss to not list all the advantages that come with purchasing an old home below market price. Those reasons being complete control, cost-effectiveness, investment returns, honing craftsmen skills, and leveling up your negotiation skills.
Fixer-Uppers Can Cost Less Than Turn-Key Homes
With turn-key homes, you pay a premium to move into a brand new home without any need for additional work.
However, if executed smartly, rehabilitating a fixer-upper can cost a fraction of what you might pay for a turn-key home. And what’s more, you’ll be building a house designed with your style in mind. Imagine being able to build the house of your dreams for less than the cost of your neighbor’s home!
To achieve this result, you either have to do the renovations yourself or be shrewd with your contract negotiation and bidding terms.
Fixer-Uppers Are Great Real Estate Investments
Fixer-uppers tend to be worthwhile real estate ventures, whether you intend to keep the fixer-upper long-term or just until the end of its remodel.
Fixer-uppers almost always guarantee a steep rise in value after being renovated. You can either cash out on tens or hundreds of thousands of dollars immediately after your project’s finish, or you can let it appreciate for years afterward and build up a valuable nest egg.
Fixer-Uppers Make Craftsmen
Due to their inherent nature of needing to be worked on, fixer-uppers have a knack for teaching buyers craftsmen skills whether they like it or not.
You’ll get to wear many craftsman hats if you plan to refurbish all or most of your fixer-upper. Most people initially find this idea very appealing because they want to improve or learn new skills.
You will still pick up on information and know-how for craftsman tasks even if you aren’t doing any renovations yourself. This is because you’ll have to correspond with various construction teams like framers, insulators, electricians, plumbers, and more.
Fixer-Uppers Make Business-Minded People Happy
Fixer-upper projects are perfect people who like to keep busy. The planning for these homes stimulates business-oriented individuals with an immense amount of finance, material, and personal logistics. Not to mention an endless amount of negotiating and inter-team correspondence between material suppliers, contractors, community officials, and so on.
The Disadvantages of Buying a Fixer-Upper
You may initially enjoy the idea of becoming a rich, master home builder with a beautiful abode. You may also realize that you are not good at measuring or working with tools or you do not have the patience to manage a large project. To help you stay level-headed in your decisions, here are some major disadvantages of buying a fixer-upper home.
Fixer-Uppers are a Huge Time Investment
No matter how many people you hire to help, you can’t remodel a house in a week. You won’t be able to enjoy or resell your fixer-upper until you’ve completed all your work, which could take months or years. That being said, fixer-uppers are a long-term commitment.
It Takes Time to Plan a Good Remodel
Before you do any work, you have to plan out your projects. You’ll want to anticipate as many projects and setbacks as possible. You’ll need to compile a list of all the materials you’ll need, create a timeline for each project phase, and have a thorough understanding of the laws and codes that come into play with your work.
For example, if you plan to do a complete remodel of the interior, exterior, and yard, you’ll need to divide your project into three phases. From there, you’ll break down each phase into mini-projects.
Your interior project phase could be a room-by-room plan or focus on upgrading the living spaces first plan before moving onto the bedrooms. With this sort of plan, you’ll want to identify roadblocks and variables such as load-bearing walls, foundational issues, and outdated electrical wiring.
Continuing with our example, your exterior projects could be broken up on a component basis, such as starting with replacing the roofing, doors, and windows, painting the exterior, refinishing exterior spaces like decks and patios. You’ll want to identify foreseeable obstacles like inclement weather, lot boundaries, and irrigation planning.
You’ll also need to have a place to store your tools and materials. If there’s room, you can store them in your garage. Depending on how much exterior space you have, you can also purchase an outdoor shed, order an onsite storage unit, or rent an offsite storage space.
It Takes Time To Learn About Building Codes
If you want to fix up an old home, you have to make sure the methods you use to abide by modern building codes. You will have to inform yourself of your city’s building codes. When it comes to adhering to building codes, we do not recommend you rely on your research alone. It is best to consult with a professional before you begin doing any work yourself. This way, you ensure you are not inadvertently breaking building codes. Breaking building codes can cause hazards and decrease the value of your home.
It Takes Time to Apply for Permits
Some renovations will require you to get specialized building permits. The application, waiting, and approval process can take weeks or months. If getting a permit is something you anticipate, make sure you have plans to do other remodeling work in the meantime that doesn’t rely on these permits, so there’s no downtime during your remodel.
You’ll Use A Lot of Your Personal Time
If you want to purchase a fixer-upper, you’ll need to sacrifice a good deal of personal time.
If you plan to do the work yourself, you will have to dedicate time to research, design, and repair. Not to mention all the time you will going back and forth to the hardware store.
You’ll still have to sacrifice a lot of personal time even if you hire a construction team or remodeling team to do your work. Even with a construction crew doing the bulk of the work for you, you’ll need to come on sight to your house until it is finished to oversee the work that is being done.
If you’re not convinced about the temporal constraints of a remodel, consider the seemingly simple task of painting a room.
To properly paint a room, you need to prepare your brushes and paint, tape off areas you don’t want to paint, scrub the walls clean, apply a primer, let it dry for at least two hours, paint the first coat, let that dry for at least two hours, paint another coat, let that dry for at least two hours, and then clean your brushes and paint spills. This example doesn’t even include the technicalities that go into painting a room professionally, like cutting in paint between walls.
Join Us for Part Two!
We hope the first part of this blog post was informative for your decision to buy a fixer-upper or not. Join us in two weeks for part two of this series to get more information about finances and why you may what to invest in a fixer-upper.
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