A house that needs a little TLC can be a great investment and the end product will entitle you to bragging rights. But don’t be fooled by the magic of TV and the 30 minute whole house transformations, fixing up a home is a lot of work and will cost you more than you think!
Do Your Homework
As with any real estate transaction, the first thing you need to do is determine how much you can afford. This will include the cost of the house, the down payment and the closing fees. After all the necessary costs are accounted for, how much remains for renovations?
If there isn’t much, you may be better off looking at houses that are already updated. They may not be exactly what you wanted but it will cost you less in the long run.
The average discount for a fixer upper is 7.6%, for a median priced home that leaves $11,000 for renovations. A good chunk of change but you’d be surprised how quickly that will disappear. And keep in mind, rarely do improvements have 100% ROI.
You’re All in for Searching for a Fixer Upper
The perfect fixer upper is the home that everybody wants when renovated but few can see past its challenges to buy. Keep these guidelines in mind when searching:
- Buy a fixer-upper below market value in a great neighborhood. The work done to the house will bring the value up to or slightly exceed the average market value of the neighborhood. However, there is a market value ceiling, so don’t price your home out with upgrades. Do the updates with the understanding that they will enhance your enjoyment of the home in addition to whatever market value increase they may have.
- Find a fixer-upper with good bones. The house needs a good foundation, where quality products were used. No matter how a home looks on the outside, it’s what’s under the hood that counts the most.
- Pick a fixer-upper with cosmetic upgrades instead of major, expensive projects. Painting, landscaping, replacing the carpet are all cosmetic projects that don’t require a ton of cash but can make a world of difference.
Take a trusted contractor with you to look at homes. A contractor will give you an idea if you can take the house from drab to fab within your budget. And make sure you add a 20% contingency to the estimate because you never know what’s lurking inside those walls until you start tearing them apart.
As much as possible, you need to learn everything you can about the property. Be sure to pay the extra $250-$350 for a home inspection and always make your offer contingent on the house passing a formal inspection.
Fixing up a home can be a rewarding experience and a good investment. Just make sure you have the right partners by your side. Let The Garatoni Group help! We will make sure you don’t get in over your head. Our team is Old Home Certified and we’ll help you filter through the money pits out there and find a perfect opportunity for you.
Contact us and we’ll get you prepared to move quickly. Chances are, if you see potential in a fixer upper, so will someone else!