Buying a fixer-upper can pay off, but it takes planning and hard work
Posted on Monday, August 11, 2014 at 10:56:10 AM
While home improvements are popular year-round, a recent report by Realtor.com found that 67 percent of all consumers intend to start a remodeling project over the next six months. Renovations are a smart option, especially given affordable home improvement financing. And, potential homebuyers could start to look for listings that need a little work, in order to get the dream home they've always wanted.
However, this can be a challenging strategy. Recently, Home Loan Investment Bank's Brian Harvey explained that a fixer-upper is not always the ideal home for a first-time buyer, so be careful when going this route.
"The excitement of owning your first home is generally accompanied by a turnkey and move-in ready mentality," he noted. "For the more adventurous and the do-it-yourselfers, buying a fixer-upper can have many benefits - both personally and financially - but there are many things to consider. Some of the key points to focus on are properly inspecting the property before agreeing to purchase, the type of improvements that are needed and what your level of involvement will be."
The homework stage of buying a fixer-upper is incredibly important, according to Harvey. Either make sure you have the expertise yourself or call in a trusted professional for some advice. The materials and the estimated time of repairs will impact the total costs. The more you know ahead of time, the easier it will be to negotiate a fair final price on the home.
"Picking a home with the right projects to be done is also very important," he added. "Homes that have minor cosmetic and repair needs will cost less to improve and give a greater return on your investment. The ideal fixer-uppers will require floor refinishing, painting, drywall repair and other minor improvements such as shutters, doors, light fixtures and even small kitchen and bathroom improvements."
On the other hand, Harvey stressed that homes with more major repairs should be avoided. Foundations, center beams, plumbing and other similar improvements will stretch your budget to its limit. Most importantly, he explained that getting involved in your project is the best way to get a solid return on investment, so roll up your sleeves and get to work.
"A fixer-upper is a commitment, but it can be a very profitable and satisfying one for many homeowners," Harvey concluded. "Taking the time to invest in the right property - with the right repair work - and with realistic expectations of how long the work will take and what the future value of the home will be are all keys to successfully buying a fixer-upper."