Marsha, my wife and I want to purchase a home in a particular school district. The homes are pricey and pushing our price range. There are some fixer-uppers that come available from time to time. What’s your view on buying a fixer?
In real estate there are three variables that constantly interact to create value for a buyer. These factors are; condition, price and location. In your case the school location and price are important. That means you’d consider purchasing a fixer-upper in your desired location and price range. There are pros and cons to buying a fixer versus a move-in ready home.
First, it’s important to know the type of fixer you are purchasing. Once you are in a contract you must have a home inspection. This will disclose if you are purchasing a dated, ugly cosmetic fixer or a wreck in need of deeper repairs. Replacing the orange shag carpeting and updating the kitchen is one thing, but a house with plumbing, electrical or foundation issues is another.
The home inspection will help you develop a budget. Be sure and crunch the numbers…and then crunch them again. What are home prices in your location for turn-key homes? How much are you willing and able to invest to improve your fixer? Make your budget, double that number and then add on half again. Things happen. You’ll be tearing into walls, pulling up carpets and replacing dated fixtures. I guarantee something will be revealed that will add to your costs.
There are many good reasons for buying a fixer. You’ll have a cheaper initial buy-in. You’ll get into the school district and location you want for less than your neighbors. There is also the added value you bring to the home. Your improvements will increase the home’s value and you should realize a gain, beyond normal appreciation, when you move. You’re in control of the renovations and remodel, so you can end up with an aesthetic that you like.
Arguments against the fixer come down to lots of work, time, inconvenience and costs. If you want to save money by living in the home during the construction projects plan on plenty of noise, dust and stress. Your weekends will be filled with sanding, carpentry and painting. As I said count on lots of hidden costs popping up.
Do you plan to do the work yourself? Be honest and don’t overestimate your handyman abilities. Are you going to design the remodel yourself or hire an expert? Nothing is worse for resale than amateur upgrades and remodels. Think seriously about hiring contractors and experts to do the work.
Recognize that when you purchase a fixer, you are buying a home and location you really can’t afford. You are investing your precious weeks, months and energy into the home instead of the dollars you’re lacking. It comes down to cost, time and convenience and that’s a decision only you can make.