Buying a house is no easy feat if you’re on a tight budget. It’s no surprise many frugal house shoppers opt for a fixer-upper over something more move-in ready. A fixer-upper house comes with its own set of advantages and drawbacks. Familiarise yourself with them before buying a fixer-upper in need of serious TLC. Here is a comprehensive guide on buying a fixer-upper house.
What Is A fixer-upper?
A fixer-upper is a house available at a lower purchase price because it requires major maintenance work. While you can likely still live in a fixer-upper, you’ll need to spend a lot of time and money on structural and/or cosmetic improvements. You may benefit from a fixer-upper if you’d like more house for your money or are interested in flipping it to make a profit.
Should you buy a fixer-upper?
Buying a fixer-upper house depends on your unique situation. A fixer-upper house may be a good option for one house shopper and a bad idea for another. So, should you buy a fixer-upper house? Consider your budget, needs, preferences and lifestyle when you ask yourself this question. Here are some pros and cons of fixer-upper houses to bear in mind.
- A lower purchase price: Although you’ll need to spend more on renovating it, a fixer-upper house will come with a lower list price and down payment requirement.
- Less competition: Generally speaking, there is less competition for fixer-upper homes, so you’re more likely to land the home you’d like at a great price.
- Chance to customise your home: Once you buy a fixer-upper house, you have the freedom to do whatever you’d like to it. Don’t like the kitchen? Remodel it. Wish there was a deck? Build one.
- Quality control: When it comes to renovations, you’re in charge. You can choose the materials, colours, contractors and everything else.
- Expensive renovations: Depending on the renovations, you may end up barely breaking even – or spending more money on a fixer-upper.
- Difficult budgeting: While you can run the numbers and estimate how much your renovations will cost you, it’s almost impossible to come to an accurate figure. There will always be surprise costs that pop up.
- Unexpected issues: Even if you get an inspection, there are almost always unexpected issues, especially if the house is older.
- Long-term construction: Unless you live somewhere else while you’re renovating your fixer-upper, you’ll have to live in a construction zone for months or even years.
Buying a fixer-upper house
If you’re thinking about buying a fixer-upper home, you might want to keep the following tips in mind.
Get a home inspection
While a home inspection will cost you some money, it’s non-negotiable if you want to buy a fixer-upper. A qualified home inspector will perform a thorough investigation of your home and provide you with a report that outlines all the repairs it will need. A home inspection is a necessary part of any home purchase, but especially with a fixer-upper.
Estimate renovation costs
When you buy a fixer-upper house, you want to make sure you can comfortably afford to turn it into the space you desire. Create a list of every project you’ll want to complete and price out the materials and labour costs. Although you won’t be able to come to an exact cost for everything, you’ll be able to figure out a ballpark that allows you to budget accordingly and decide whether the investment is worthwhile.
Determine if a permit is required
Some renovations may require permits. Of course, the location of your home will dictate which renovations you need permits for, but in most towns and cities, permits are necessary for:
- Structural work
- Window installation
- Room additions
- Sheds and garages
- Plumbing and electrical work
Identify what you can renovate yourself
There’s no denying that DIY renovations will save you a lot of money. If you’re handy, figure out which projects you can renovate yourself. While you may not be able to tackle the electrical and plumbing on your own, you may be able to paint and apply a backsplash without a contractor’s help.
Make a smart offer
The last thing you want with a fixer-upper is to overpay. The whole point of buying a house that needs work is getting a good deal on it. Make an offer that strikes a balance between a good deal and the cost of necessary repairs. With any offer, you should include contingencies. Contingencies are exceptions that allow you to back out of a purchase if something comes up.