Despite the undeniable excitement that comes with turning something blighted into something beautiful, taking on a fixer-upper isn’t always worth the extra effort. Pop culture’s obsession with rehabbing old properties has led many home buyers into uncharted territory, handing them projects too big to handle. So before you buy an old shack that you intend to flip into your dream home, consider these 4 questions:
Do you have the skills to do the work?
The fixer-upper you have your eyes on likely comes at a bargain price, and that’s probably one of the reasons you’re looking to buy an older property in the first place. If you want to save money in any way you can, you might plan on doing much of the work yourself. But be warned: it takes time and finesse to complete a professional-looking rehab project. You as a novice drywaller, carpenter, or painter may make mistakes that a professional never would, and that could cost you down the road when it comes time for repairs or re-sale. TV shows make flipping look easy, but if you’ve never done the manual labor it requires to rebuild and redesign your home, you might want to reconsider your decision to buy a fixer-upper.
Do you have the time to invest?
In addition to taking the time to learn new trades, you have to balance your already-packed schedule with completing the remodeling work. After a long day at your 9-5 job, do you really want to lay tile in your 200 square foot kitchen? And if you do the work a little bit at a time, are you okay with the entire flipping process taking months or even years to complete? Your fixer-upper will likely turn into a part-time job, and that added burden is not always worth the better price.
Are the key parts of the home in good shape?
The best fixer uppers are the ones that have maintained their structural integrity and mostly need cosmetic updates. If a home has “good bones” (i.e. intact load-bearing walls, foundation, floor and roof framing, and support beams), then it’s likely a feasible investment. Out-of-date finishes and minor damage are a lot less expensive to correct than structural elements. To make sure the home you’re eyeing up has “good bones”, get it inspected before signing on the dotted line.
Additionally, you’ll want to consider which rooms need the most work. Any real estate professional will tell you that kitchens and bathrooms sell houses. Those rooms are also usually the most expensive to remodel. According to Home Advisor, the average bathroom remodel costs $10,295. On a large master bathroom, you could spend upwards of $13,000. On average, an updated kitchen will cost you $23,226, and depending on its size, could easily hit $35,000. A fixer-upper in which these two spaces need less work will be a sounder investment.
Are you guaranteed to increase equity?
Run the numbers. Determine what your rehabbed home would sell for if you completed all of your planned improvements. Utilize your real estate professional or an appraiser and make sure the home will end up being worth significantly more than it was when you started. Justify the project with actual cost projections and re-sale values, not just your fantasies of customizing your dream home.
Simply asking yourself these four questions before buying a fixer-upper could save you a lot of future headache. Making the old new again requires more time and effort than most realize, and the worst thing you can do is buy real estate without considering the full picture.