Lots of us enjoy whiling away an hour or three watching those shows on HGTV that involve an attractive couple buying a house, spending what seems like a few hours (or days) making some repairs and upgrades here and there, then either moving into the home of their dreams or flipping it for some serious cash profit. And if you’re going to fantasize about some aspect of homeownership, you could do a lot worse than creating your own private castles in the clouds that you help build and finish all on your own.
That said, the reality behind buying a fixer-upper is a lot starker and more difficult than what you see on HGTV. There are more buyers than ever who are hoping to create their perfect fantasy home out of a fixer-upper, or who think they can flip a house just like those attractive couples on television — and some of them discover they’re wrong only after hundreds of hours and thousands of dollars have been spent, never to be recovered. To make sure you’re making the right decision and following a realistic plan with your fixer-upper, educate yourself about the following realities and necessities of buying a home as-is, whether you plan to fix and flip it or turn it into a gorgeous residence where you’ll be happy for years to come.
What’s Your Plan for the Fixer Upper?
People tend to buy fixer-uppers for two main reasons:
(1) They want to try their hands at fixing and flipping a house.
(2) They’d like to buy a house for cheaper than average in a certain neighborhood that they can polish up and live in.
Where are you going to live while this to-be-purchased house is being renovated, for starters?
Whether you want to flip the house or turn it into your own primary residence, decide if you can stand living in a house that’s undergoing some serious changes or if it might make more sense for you to maintain a separate residence while the house is being transformed.
The second option is obviously financially prohibitive for some people, but maybe you can get creative — do you have friends or family who might be willing to let you crash in a spare room while you’re working on the fixer-upper, for example?
If you do want to live in the home while it’s being fixed up, then you might need to truncate your timeline for some of the repairs. Living in a home where all of the bathrooms are off-limits at once due to simultaneous renovation is not really feasible for most of us humans.
Do the Math
Would-be investors who are hoping to make a profit from their fixer-upper already know that it’s critical to get the math right — if you spend too much on the house itself, or on any of the repairs, then your profit will evaporate, and you never know what’s going to happen to the real estate market months down the road.
Getting those repairs done quickly will be important, but you can almost guarantee that your planned schedule and budget for fixing up the house are both going to get derailed by at least a little bit before all is said and done (more on that later).
If you want to live in the house, then your timeline for getting everything done is more flexible.
Take a good, unblinking look at your financial situation and figure out what you could potentially pay for a fixer-upper and how you’re going to handle the expenses of the actual fixing-up that you’ll have to do.
There are a number of mortgage loans available that factor in renovation and repair costs for fixer-uppers; your mortgage broker should be a good source of information for which of those loans is best for you (if any), and a financial planner can help you figure out a good budget and timeline that will work for your household.
Be Willing to Pitch In … and Honest About your Abilities
Fixing up a house is cheaper if the homeowner is willing to help with at least some of the repairs, so ask yourself how much you might be able to help — and don’t overestimate your ability to get the work done. If you aren’t a contractor yourself and don’t have experience with repairs or renovations beyond a little painting and maybe changing a light bulb here and there, then it’s absolutely unrealistic to expect that you can tackle major structural issues, plumbing problems, or electrical nightmares.
There probably is quite a bit you can do yourself, though, from replacing light fixtures to painting or wallpapering rooms, or even refinishing wood floors yourself. YouTube can be a wonderful resource for figuring out how to do these things, so watch some videos and get a sense for what you might be willing and able to tackle yourself, and what’s probably beyond your scope.
Location is Key
You can change a lot of things about a house, but one thing that is downright impossible to adjust is where it’s located; you can’t pick it up and move it to a different lot without spending a lot more money than you’re probably willing to invest.
Homes near a landfill, in a crime-ridden neighborhood, or located in poorly performing school districts are likely not going to be a great investment.
By the same token, waterfront homes, homes near national forest or parks, and homes in proximity to other desirable landmarks or features might be perfect choices even if you think the repairs are going to be extensive.
Popular is Better When it Comes to Bed/Bath Count
Some of the more difficult home renovations include adding a bedroom or a bathroom (more on those later), so if most of the homes in the area have three bedrooms and the fixer-upper you’re eyeing only has two, it might not be worth your time to try to flip that house.
On the other hand, if the fixer-upper has four bedrooms and the neighborhood standard is three, then it might be worth it to buy that house just because an additional bedroom will make it an upgrade.
Looking Past Cosmetic Problems
There are two main types of fixer-uppers that you’ll see on the market.
One is an ugly house — and ugly can be fixed! The other should be strenuously avoided if at all possible: The tear-down.
That said, if you can look beyond the obvious cosmetic issues to see the potential in a home, then you can often find a great deal that can be relatively easily transformed into a dream property. Old or outdated carpeting, shabby cabinets, peeling paint, ugly light fixtures, and other items like that are usually easy fixes.
Evaluate the Layout
Another thing you’ll want to consider as you shop fixer-uppers is the layout. An intuitive layout that flows from room to room and is easy to navigate might be a good house for you to make an offer on, assuming there are no major issues that will be prohibitively expensive.
Do the windows capture plenty of natural sunlight?
Are the kitchen close to the dining room and the living room?
How are the bedrooms placed in relation to each other and in relation to the bathrooms?
Figure out where you can add and conquer
The best time to tack on an additional task when fixing up a house is when you’re already working on the same room, wall, or area. For example, if you need to replace the insulation in one of your outdoor walls and also want to add a picture window, tackling both of those projects at the same time will save you money and time. Add shelves in your kitchen cabinets while you’re also refacing those cabinets. Replace the sink in the kitchen when you redo the countertops. Deciding where you can add projects here and there will help you get to the final desired result faster and will actually minimize the amount of time that the home is under construction.
Extra Inspections are Worth It
Before you reach the closing table on your fixer-upper, negotiate extra inspections with the seller so that you are absolutely clear on what you’re getting into and what will need to be done. Some additional inspections may include: pest, sewer line, and electrical especially with much older homes.
Prepare for Permits
If you want to dig a pool in your backyard, you don’t want to discover that the house you bought isn’t zoned for pools after it’s yours. Figure out how much those permits cost and what’s involved or included so that when the time comes to actually make those repairs or upgrades. And what does the HOA say? Many HOA have rules about outside improvements.
Decide Where You Can and Can’t Compromise
You might need to make some decisions about what aspects of your dream home (or dream flip) should be sacrificed when push comes to shove, so it’s worth your time to determine upfront whether you absolutely have to have a certain feature or whether it’s negotiable.
Surprises costs will happen, so you need to be prepared.
Find Reliable, Capable Contractors
A good contractor — or a bad one — can make or break your home renovation experience.
If you spend a lot of time researching just one aspect of your home renovation, it really pays to make sure that single aspect is the contractor who will be overseeing the work that needs to be done and that you can’t tackle yourself.
Get referrals from people you trust, look at online reviews, check references, ask to see photos of past projects, and do whatever you can to ensure that the contractor who ends up being your go-to is good at what they do.
Be Prepared to Go Over Budget and Past Schedule
Even the best contractor can’t predict all of the possibilities that could derail a home renovation or repair project, so it’s up to you to be realistic about both your budget and your schedule, especially for major endeavors like adding a garage or a full kitchen remodel. Understand that the work might cost more than projected and could take longer than estimated — plan on it, in fact — and then you won’t be unduly shocked if that ends up happening, and might wind up pleasantly surprised if everything goes according to plan.