Purchasing a fixer upper home may seem like a risky proposition to many people. It may turn out to be a terrific deal or it could become an absolute nightmare filled with unexpected disasters. One of the keys to buying a fixer upper is to properly do your homework and of course have the property completely inspected by a professional. There are many advantages to buying a fixer upper, some of these include the following:
- A lower purchase price
- Lower competition to purchase the home
- A potential for resales profit
The potential for resales profit is a big one. If a fixer upper is purchased at the right price you have made money the day you close. The opposite is equally true, that if you pay too much for a property, you will never recoup the purchase price and improvement costs when it comes time to sell the property. It is important to think about selling the property before you buy. Even if you have no immediate plans to sell the property. This will give you a different perspective and help to avoid some costly mistakes.
The ideal fixer upper is a home that everybody would want but very few have the ability to look past its imperfections to buy it. The lack of paint, holes in drywall, overgrown vegetation, and ruined flooring are just too much for most buyers to absorb. The thought of “all that work” just turns many home buyers in the other direction, often towards a home that is clean and ready to occupy with minimal work. One of the most important aspects of a fixer upper home is of course a great location because we’ve been told that location drives saleability. Purchasing a fixer upper in a bad neighborhood with a busy road won’t help your cause when it comes time to sell. Look for homes in desirable neighborhoods with homes that are properly maintained. It is also a great idea to bring in a Real Estate Professional to ensure you have all the information needed to accurately access a neighborhood or area of town. Another important aspect of purchasing the right fixer upper is the configuration and layout of the home. You want to purchase the type of home that will attract the largest pool of home buyers. Ideally the home will have at least three bedrooms and two baths. Many home buyers are looking for a house with an open layout that “flows”. It may be impractical or too expensive to modify a layout and move walls.
This leads into a third important aspect which involves the actual condition of the fixer upper you intend to purchase. We all have different skill sets and what looks like a major renovation to one person may seem minor to another. That is why it’s important to accurately evaluate your own skill set and determine what work you can self perform and what work must be performed by competent contractors. This will also provide you with a scope of work that can be used for estimating the cost to update the home. Lastly, make sure to have the home properly inspected by a Certified Professional Inspector. A comprehensive home inspection will provide great understanding of the overall condition of the home and list any major defects that you may have missed during your own walk-through. It will provide a list of items that require repair and/or replacement and could be used as a basis for your estimating costs to update the home.