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Is Buying a "Fixer-Upper" a Good Investment?
Should you spend less money buying a fixer upper, or more money buying a fixed up home? This is the question. While there are no simple answers to these questions, here are some tips you should consider when choosing:
1. Do the math.
One of the keys to determining whether or not to buy a fixer-upper is determining the cost of the repair. Have a professional appraiser handle the task, to get an accurate appraisal. The cost of fixing up the house will vary, depending on the current condition of the house. After the evaluation, you’ll have some hard facts to make a wise decision about whether to fix up your home or make it someone else’s headache.
2. Choose homes that need minimal repairs.
Fixing up a house doesn’t have to require a complete overhaul. It is advisable to look for houses that need a new coat of paint (interior or exterior), new carpet, basic plumbing, etc. On the other hand, if a house needs major repairs, make sure it is priced very low and fits your long-term housing plans.
3. Consider how much time and effort you have.
The amount of repair work that a top repairman needs can vary very significantly. So, in addition to determining how much work is needed, consider how much time and effort you’re willing to put in. If you need a livable home sooner, this might be a bad choice. If you don’t have the energy to do the necessary home repair work, you should probably buy a new home.
4. Know the housing trend in the area.
Fixing a house in a good location is one thing. Fixing a house in a bad location is not such a good idea. So, before you decide whether or not you should buy a particular fixer-upper, determine whether the home’s value will generally go up or down afterward. If the latter were to happen, then you might decide that the funds needed to repair the house would not be worth it. On the other hand, if the houses in the neighborhood tend to appreciate in value, it may be money well spent.
5. Consider your long-term housing plans.
Do you want to live in your next home for years or decades? Fixing up a house can be a long and difficult process. The time, effort, and money required can be too much if you don’t plan to live in a particular home for several years. Again, the investment could be worth it if the repairs needed for a fixer upper are basic.
6. Get comprehensive and multiple ratings.
This is crucial when considering whether or not to buy a fixer upper. Consider getting at least three ratings and then averaging them. In addition to getting multiple appraisals, you should always get thorough appraisals that include the roof, floor, etc. Make sure when comparing ratings that you compare apples to apples.
Is buying a fixer upper the right choice for you? The above tips will help you make the best decision.
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