One man’s money pit is another’s DIY project, but is a fixer-upper really right for you? Understanding the complexities of buying and renovating a fixer-upper can help you make the right decision about whether or not to buy a home that needs TLC.
The Pros of Buying a Fixer-Upper
Thinking about buying a fixer-upper? Despite horror stories, it’s not always a bad plan. You just have to have plenty of extra cash and a solid game plan.
You Can be As Creative As You Want
Creative people love the idea of a fixer upper. They watch home renovation shows, compare paint samples, and live for fabric swatches and DIY tile jobs.If you buy a fixer-upper, the potential is there to transform it into your dream home. You can customize it and change things until they suit your vision.
You Can Choose Where to Spend
Taking a good hard look at a fixer-upper will reveal where money is best spent. That might be adding a bathroom, renovating a kitchen, or simply putting in all new flooring followed by a few coats of fresh pain.
You Can Increase the Value of the Home
If you choose wisely and spend your money carefully, you might be able to increase the overall value of the home beyond what you put into it. If you want to flip for resale down the road, this means you could end up turning a profit. At the same time, you’ll only pay property taxes starting out based on the price you paid for the home.
Cons of Buying a Fixer-Upper
Of course, there are caveats that come with the idea of buying a home that needs work. You could find yourself rapidly in over your head.
Where Will You Live?
If the fixer-upper, like many, isn’t move-in ready, you’ll have to consider housing costs for you while you do renovations. If you haven’t sold your other home yet, this may seem like no big deal, but if you have to live out of a secondary rental or hotel costs can add up.
How Much Cash Do You Have?
If You’ve purchased a fixer-upper, you may have to come up with all the renovation expenses out of pocket. Getting another loan to cover them is an unlikely scenario. Calculate how much you think it would take to get the house livable or saleable, double it, and you might be somewhere in the ballpark. These things always cost more than you think, and running out of funds halfway through can leave you in a lurch.
Low Return on Investment
Unless you luck out and are able to renovate in such a way that you significantly increase the value of the home, buying a fixer-upper can have a low return on investment. This is particularly true if the house is in an undesirable neighborhood. It won’t matter how hard you work to make the home inviting if no-one wants to live next to the airport.
Fixer-upper homes can be a risk that pays off, or one that drowns you in debt and regret. Think carefully before making your decision and make sure you get a thorough home inspection so you don’t uncover dry rot with the first swing of a hammer.
Your Sammamish Mortgage Loan Officer Can Help You Start the Preapproval Process Today!
We’ve fine-tuned the preapproval process to make it one of the easiest experiences you’ll have in the whole home buying process. Buying a home should be fun and exciting, not stressful. Get preapproved today!
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