Fixer uppers are fantastic if you want to blank slate, have a vision for a particular room, or want to save money upfront.
If you’re interested in a fixer upper but you don’t know anything about the process, you’ve come to the right place.
Here’s everything you need to know.
What Is a Fixer Upper?
Fixer upper houses can usually be lived in but need maintenance work such as redecorating or reconstruction. As a result, fixer upper homes for sale are far cheaper options than other properties on the market.
Once complete, you can look into turnkey real estate so your property is sold faster.
Things to Consider
Whether you’re seeking fixer upper kitchens or other home renovations, not all fixer uppers are made equal. It’s important to know what to look for so you’re not lumbered with an impossible task.
These are the telltale signs of a fixer upper. For instance:
Avoid buying a fixer upper that’s near a highway, next to a school, or opposite a landfill. You must remember these are undesirable locations even in recently renovated properties so be mindful.
Look for fixer uppers in up-and-coming neighborhoods so they have a better chance of selling. Evaluate the surrounding properties and see how they’re maintained so you know which standards to reach.
The layout is a deal-breaker with fixer uppers so find one that has the best configuration. For instance, most buyers want a three-bedroom property with over one bathroom so find one like that.
The layout should also flow because if there’s a closed floor plan then it’s costly and impractical to move walls. You should also ensure the kitchen has multiple entrances, bedrooms are close together, and all one the same floor as it’s more desirable.
Before you can redesign fixer upper bathrooms, consider the condition of the property. All fixer uppers need work but there’s a difference between easy fixes to more final ones. Cosmetic examples include:
- Installing light fixtures
- Fixing broken windows
- Re-doing floors
- Changing electrical outlets
Most of these are DIY jobs so it won’t affect your budget compared to fundamental ones like:
- Replacing HVAC (heating, ventilation, and air conditioning) systems
- Kitchen or bathroom remodels
- Replacing plumbing, electrical wiring, and sewer lines
These must be done by professionals who have the experience and expertise for the job. Even if you’re a savvy DIY-er, if you make a mistake then it’ll cause further damage and cost even more than an initial payout.
Outline Your Budget
Work out the fair market value of the property which means what it would be worth if it was in good condition and remodeled to suit your taste. You then subtract the upgrade and repair costs to get the estimate.
For instance, your fixer upper house has a 1970s kitchen and minor structural damages. Compare this with a comparison property that sold for $300,000 recently and had a remodeled kitchen with zero structural damages.
The cost to remodel the kitchen and fix the minor structural damages cost $30,000. This means your bid for the property should be $270,000. But first, ask a realtor for their opinion to see whether they offer is fair.
Before buying the fixer upper, hire a credentialed home inspector to evaluate the property and estimate the cost of the work that needs to be done. For instance, the seller should show you a roof certificate that details the age and condition of the roof so you can decide whether it needs replacing.
You should also get a pest and sewer line inspection to ensure there is no damage. If repairs are necessary, many home inspectors will advise you to return to the seller and ask them to do the repairs or give you cash to cover the cost. The seller may back out of the deal, just like you could, which shows this fixer upper isn’t for you and you should continue the search.
The fixer upper may need major foundational work so hire a structural engineer so you know about essential repairs so you can fit them in your budget. The only reason you should accept a fixer upper with structural damage is if:
- You’re getting a fantastic discount
- The problem is fixable
- You have a binding written estimate for the repairs
Remember, if you’re doing the renovations yourself then price the supplies and add an extra 10 percent to 20 percent to cover unforeseeable problems that could arise. You should also check permit costs either getting them yourself or asking a contractor to arrange them.
It’s tempting to keep costs down but if you don’t have a permit and you want to resell, it’ll create many problems.
Check Out Mortgage Options
Once you’ve figured out your budget, consider the available financing options. For instance, renovation loans help you finance a house and improvements which means you can pay off the costs over an extended period with a low-interest rate.
You can also consider an FHA 203(k) loan through the Federal Housing Administration. This lets buyers with lower credit scores borrow money for their improvement projects compared to conventional mortgages.
Or, if you have a high credit scored, consider the HomeStyle loan where many luxury improvements like pool or landscaping are approved.
That’s Everything to Know About Fixer Uppers
Now you know how to budget and choose between fixer uppers.
Inspect the property, consider the location, and create a fair purchase offer so you get a fantastic deal. You should create a detailed budget and check out mortgage options for the best financing solutions to help you land the property. Good luck!
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