A lot of people are trying to buy a fixer-upper instead of a home that is in great condition. The reasons may vary, such as cheaper price, the repair costs could be cheaper than expected, or the house is going to be renovated anyway. Whatever the reason is, a fixer-upper has a lot of potentials if you know how to capitalize it.
If you didn’t know already, a fixer-upper is a property that needs some form of repairs, updates, or maintenance before it can be considered habitable or sellable. The changes can be structural or functional, or even completely cosmetics. Among many real estate investors, fixer-uppers are like their golden tickets. Even first-time homebuyers can get a lot of opportunities from fixer-uppers. But before you jump in, there are some things you need to consider first.
As you may have already predicted, structural work tends to be the most expensive cost that you will ever do. This kind of work is often associated with buying and repairing a fixer-upper. Considering the expensive cost of structural work, it’s recommended to always commit to having a property inspection before purchasing. This is done to avoid any bad surprises when it comes to the overall structure of the property after you purchased it. No one wants to be surprised that they have to do and spend more in order to repair the fixer-upper.
Not all renovations require a permit, but if you keep your plans open, it is important to find out about the permitting requirements and the related costs. Keep yourself informed and updated regarding permitting costs, so you can always be ready for anything.
Calculate the ROI
If you’re planning to sell the property later, obviously you want to purchase a fixer-upper with a strong ROI. This tip also applies after you purchased the fixer-upper. Before jumping into a renovation, you need to figure out what projects will bring in the stronger ROI and which ones won’t. After you figured it out, simply eliminate all projects that have weak ROI and proceed with projects that have strong ROI. Everything else should go hand-in-hand with your budget and timeline.
Spending time fixing up the kitchen, bathroom, landscaping, etc. should be beneficial for you. Some parts of the house are more valuable than the rest and you should prioritize them. In other words, make sure all the areas of the house that will give you the ability to increase the overall house are on top of your priority list.
Can the project go over budget?
You can create the most complete plan in existence, but you still have to be ready for going over budget. Renovations can be expensive, and many unexpected things can happen, therefore it is like going over budget. Don’t feel down when it happens, just make sure you’re ready for it. Make sure all your projects have some room to go over budget to keep them running smoothly.
As always, when it comes to purchasing a property, location is a crucial factor. While it is true that the benefit of purchasing a fixer-upper is that you can choose the best location and still get the best deal on the property, some people try to make some compromises
But that’s not ideal. Purchasing a property in the best area or neighborhood possible is the advantage of purchasing a fixer-upper. If not, then there is little to no advantage of it. So please remember that before purchasing your next fixer-upper.
Make it unique
Another great advantage of purchasing a fixer-upper is that you have the chance to make it unique. It is the complete opposite of buying a “turnkey” house, which leaves no room for improvements and personalization. So before you regret it, make sure to make the property as unique and personal as possible. In other words, make the property completely yours.
Purchasing a fixer-upper offers so many possibilities at the right hand. If you have the chance to purchase a fixer-upper, don’t forget to make a plan for all the possibilities that you can do, depending on what your end goal is. Remember to spend less money on repairs and improvements than what you would spend on a turnkey.