It’s a first-time home-buyers dream come true: a fixer-upper in a great neighbourhood that you can renovate however you imagine! Even if you’ve owned several homes before or flip real estate for a living, we can all appreciate the bargain – and the creative opportunities that fixer-uppers tend to offer. There are many advantages to purchasing a home that is in dire need of a little TLC, despite some of the horror stories you may have heard in the past. Here are some benefits of purchasing fixer-upper homes that are sure to give you some peace-of-mind!
PRICES ARE LOW
Generally, homes that need some renovations are less expensive. Quite often, these homes are significantly cheaper than similar homes in the same neighbourhood. If you can manage to snag a rundown home that doesn’t need a complete makeover– or be completely demolished– you could potentially save yourself a lot of money.
That said, you should be wary of prices that seem too good to be true. If a fixer-upper in a great neighbourhood is far below market value, the home may need significant work. Depending on your budget, this may or may not be acceptable. Always make sure that you fully understand the extent of all the work needed, and have access to a great contractor who can give you an accurate estimate on the project; BEFORE you buy!
SHOW ME THE MONEY
Fixer-uppers can be very profitable if you find the right opportunity. People who flip houses for a living know how to find a good deal, but even first-time buyers can celebrate a great investment if they know what to look for. The most profitable homes are those that need mostly minor cosmetic repairs, such as painting, carpet replacement and/or new appliances. Homes that simply need a little updating often sell for much lower prices than those modernized counterparts. These types of homes will help you build equity quickly and make your investment more profitable.
THE HOUSE IS YOUR CANVAS
Buying a fixer-upper can be quite fun because you can literally transform the home into anything you want. From choosing paint colours to carpets, and to appliances and cabinets, you have complete control over just about all of the design aspects and can truly make it your own. When you make renovations, particularly to the bathroom or kitchen, you automatically increase the value of the home. Essentially, you’re generating instant equity that you may be able to use in the future.
LOCATION, LOCATION, LOCATION
Many people know the general neighbourhood they want to live in, but with that, sometimes the trouble is that there aren’t any homes for sale there. If there are, they aren’t always in your price range, especially if you’re a first-time buyer.
Homes that need renovation usually tend to come at a significantly cheaper price, and this may be your opportunity to get into the neighbourhood of your dreams! It may take some time and money to fix it up, but you’ll have the advantage of being in a great location. As you know, location is everything in real estate, so being in a great neighbourhood will automatically add to the value of your home.
THAT BEING SAID…
There are a few things to consider before buying a home that’s a fixer-upper. As you may have guessed, buying a fixer-upper does come with a set of risks and challenges. So, here are some important things that you need to consider before committing to a purchase, so that you don’t find yourself in over your head.
WHAT NEEDS TO BE DONE?
How much work is needed to bring the home up to neighbourhood standards? The importance here is to consider major repairs that might be needed, such as:
· A new roof
· Foundation issues
· Plumbing problems
· Electrical issues
These items have the potential to drive up renovation costs significantly. If the home is simply in need of new appliances, flooring and paint, the opportunity can potentially be far more profitable.
WHICH REPAIRS CAN YOU DO YOURSELF?
At this point, you’re excited and feeling ambitious for sure but, it’s also important to be open and realistic about which repairs you can do yourself. For example, if the home’s roof needs to be replaced, unless you’re a certified roofer, you can’t expect to take on this job yourself. On the other hand, installing new flooring, painting and minor drywall work shouldn’t be difficult to take on, but major issues will likely need to be repaired by a professional, which will cost you some money that should be accounted for.
IS IT WORTH IT?
Again, we ask the question; how much work do you need to put into the property? If a home needs a lot of work, the cost may outweigh the benefits. When all is said and done, you want your renovations to add value to your home – enough value that you’re getting a decent return on your investment. This is why it’s important to work with a contractor you can trust. If you have an accurate estimate of renovation costs before you start, you can compare them to the market value of similar homes and determine whether it’s worth the investment.
A home that needs renovation can be a prime investment opportunity. If you know what to look for and are realistic about the costs, these types of properties can prove to be lucrative opportunities. Good luck and have fun!