If you or your partner are handy people, a little hard work probably doesn’t scare you. However, buying a fixer upper home can present some unique challenges and risks.
Buying a Fixer-Upper: Pros
Want to invest in a home that requires a little TLC? As long as you are pretty good at DIY, everything should be A-OK.
For the love of the journey
If you’re completely fascinated by home renovation shows, spend hours on DIY YouTube channels, and can’t spend less than two hours in a home improvement store because you get lost in comparing paint samples, a fixer upper could be not only your dream home, but your dream job.
Where does your new home need the most love? You might need to completely tear out the kitchen, add a bathroom to the master suite, or maybe just a good coat of paint and new floors will do the trick. Decide carefully where your available dollars will go before you get started.
Planning to flip and skip?
Another reason many people buy a fixer-upper is because they think they can increase the value of the home then resell it at a profit. Just remember the cardinal rules: Everything always takes longer and costs more than you think. Carefully research the demand in your area before buying a home you plan to resell.
Buying a Fixer-Upper: Cons
Fixer-uppers can pose a big risk if good bones stand on a shaky foundation or you discover mold or insect damage. You’ll also have to consider the following:
If your fixer-upper is uninhabitable, where will you live while you whip it in to shape? If it’s an investment property or you own another home, this may not be as big a concern, but if you have to shell out for a rental you could see a loss on your investment.
Things always take longer and cost more than you think, and running out of money half-way through a remodel can be a real bummer. Make sure you have plenty of liquidity so you can get form where the house is to where you need it to be without stalling out and being forced to keep paying a mortgage on a half finished renovation
There’s a chance you’ll hit the jackpot with your fixer upper, but remember, there’s a reason the house was so affordable in the first place. If you have to sink tens of thousands of dollars into it to make it habitable, or it’s in an undesirable neighborhood, you could end up holding the bag on the property for a while or ending up with less than you went in with.
Best tip when buying a fixer upper? Go over that home inspection line by line and sit down with your budget to figure out what needs to happen to turn a profit. Of course, if you plan on living in your fixer upper, the costs of fixing it up could be defrayed over the years you spend in the home!
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