Are you looking for your dream home amid the current housing boom?
In July this year, forecasters predicted that there was only 6 months’ worth of new homes available for sale in the US. So, as house prices continue to escalate and housing shortages loom, you might find yourself wondering, ‘should I buy a fixer-upper?’
These are the top three reasons for buying a fixer-upper.
1. You’ll Get Favorable Finance
Finances are always one of the main things to consider when buying a fixer-upper, or any home for that matter.
It’s easy to access finance with low long-term interest rates and favorable loan terms at the moment. Yet, due to rising home prices, you might still struggle to find an affordable home in your preferred area.
Fixer-upper homes are always cheaper due to their poor state of repair. That means you can secure a home in a prime, popular area for a much lower price.
A cheaper asking price means smaller long-term repayments and lowers interest costs. This can often save you a lot of money despite what you spend on renovations.
The adage, ‘location, location, location,’ is particularly relevant when it comes to buying homes for sale as-is.
When you work with a reputable seller, you’re sure to discover more about how to buy a fixer-upper and save, too.
2. Buying a Fixer-Upper Gives You Satisfaction
Building your dream home from scratch brings an intense sense of achievement. No doubt, during your search for a home, you’ve come across countless instances where you’ve thought, ‘if only the room was bigger’, or ‘that floor’s not ideal.’
When you buy a fixer-upper, you’ve got an almost blank canvas to work with. You can make sure every repair and refurbishment you make fits in with exactly what you want.
DIY projects are also a great way to spend time together as a couple or a family, and a good bonding opportunity. Every time you look at your laminate flooring, or gorgeous kitchen cupboards, you can remember, ‘we did that, together.’
All the new skills you learn while working on your fixer-upper will stand you in good stead when it comes to future home repairs, too.
3. You’ll Build Sweat Equity
There’s one more way to save money when buying a fixer-upper home, that’s by doing some work yourself. Sweat equity is hard work that pays off.
When you work on manageable fixes while renovating a fixer-upper house, you’re saving on labor costs. At the same time, you’re increasing the value of the home.
It’s true that paying your mortgage also builds equity, but it’s a slow-moving benefit. Adding a new room or roof adds value almost instantly.
If you’re uncertain about your ability to do justice to a fixer-upper, you’ll get a good idea of what’s involved during a home inspection. You must get an expert to inspect a fixer-upper before you agree to buy it, or you could end up spending money on a house that’s inches away from condemnation.
A home inspection will give you a good idea of how much time and money you’ll need to spend on your new home before it’s move-in ready. There are many home refurbishment tasks you can undertake yourself without expert help.
Steer clear of electrical, roofing, demolition, and plumbing jobs. These are best left to the pros.
Most homeowners can paint, install flooring (except hardwood), and complete minor repairs on their own.
Things to Consider Before Buying a Fixer-Upper
It’s always best to err on the side of caution when buying a home that needs work. So, before you rush out and buy the worst house in the best area you can find, consider these pointers:
Do You Want a Move-In Ready Home?
There’s a good chance you won’t get to live in your fixer-upper for several months while major refurbishments take place. If you’ve already sold your current home, that means finding alternative accommodation and placing your furniture in a storage facility.
This will involve extra costs and huge inconveniences. If you can afford it, it’s best to sell your current home once your fixer-upper is habitable.
Do You Dislike DIY?
Reality TV shows aside, buying a fixer-upper involves vast amounts of hands-on work. Although anyone can learn basic DIY, not everyone enjoys it or has the time to carry out minor fixes for months at a time.
What Will You Pay for Renovations?
Replacing a roof or rewiring your home are among the most expensive home improvements around. Once you get the results of your home inspection, do some research to figure out what you’ll pay for major items on the list.
Sometimes it’s cheaper to buy a move-in-ready home once you’ve factored in all the expenses involved in completing your fixes.
Don’t forget, these improvements will also add value to the home, so you’re going to need some fancy math skills to figure it all out.
What About Permits?
The location of your new home will determine what permits you need. In most towns and cities, you’ll need a permit for the following:
- Additions like rooms, garages, and sheds
- Any structural work
- Window installation
- Electrical and plumbing work
Applying for permits takes time and money, especially if you need to provide detailed plans for your alterations.
Your Dream Home Is Within Reach
Investing in a home is a major financial and life decision, so don’t buy a fixer-upper simply because it’s a trendy thing to do.
When you buy a fixer-upper, you must consider whether you’re happy to live in the area long-term, find a good tenant, or if you will earn a significant ROI when you sell the completed home.
Is buying a fixer-upper a little beyond your capabilities? Browse our blog for more ideas about finding or creating your ideal home.