Chances are you have seen at least one of the remodeling programs on the HGTV channel.
The concept seems simple. Purchase a home with potential–has good bones, but needs some work. Invest in renovations and the property value will skyrocket.
But tackling a fixer upper isn’t as easy as it seems on TV and there is no guarantee you can turn a profit with home renovations. So how do you know if you are up for the challenge? How do you determine if a fixer upper will be a sound investment?
When Buying a Fixer-Upper Might Be the Right Choice
You Want to Customize the Home to Match Your Taste
One major benefit of purchasing a fixer upper is that you have more control over the design of the interior and exterior of the home.
A move in ready, or turn key home, may have a kitchen with no updating or remodeling needed. Even the aesthetics might be somewhat pleasing but you didn’t create it. You may find more satisfaction in choosing your own granite countertops, cabinets and flooring, especially if you enjoy decorating and have a good eye for design.
Spend Less Money for Prime Locations
You know the saying in real estate, “Location, Location, Location”.
If you can find a home in a prime location at a significantly lower cost, you could extend your search to a zip code that you may not have been able to afford otherwise.
Also, the better the location, the higher potential you have to recoup your investment on renovations. So be sure to research the crime rate, school district and value of other homes in the area.
You Have Construction Knowledge and Physical Ability to Complete Renovations
As stated earlier, DIY home improvement projects aren’t as simple as they seem. They are time consuming, physically exhausting and there are building codes to comply with. For this reason, hiring a professional contractor is highly recommended.
However, if you have construction knowledge, are a contractor or are extremely handy, you will save a lot of money by not paying for physical labor. You will only incur the cost of materials and your time. If you are an experienced project manager, you may be able to act as the general contractor and save 10-15% of the total project cost.
When Buying a Fixer-Upper May Not Be the Right Choice
You Want to Move in Right Away
Depending on the level of repairs needed, home improvement projects can be time consuming and will disrupt your lifestyle at some point. Even if you hire a professional to complete the physical work, be prepared to be inconvenienced at times.
If purchasing a home that is move-in ready and hassle-free is more important to you than making updates and customizations, consider a turn key home instead of a fixer upper.
Home Improvement Projects Have a Low Return on Investment
Certain fixer uppers may not be worth the investment or even worse, turn into a money pit only causing you stress and aggravation.
Avoid or carefully scrutinize and professionally assess homes in need of major repairs such as:
- Structural damage
- Foundational problems
- Outdated mechanical systems
- Problems with septic tanks or other major plumbing issues
The actual costs of these types of repairs may be difficult to assess until you are already fully invested in the project.
Also, these types of repairs often do not raise the value of the house enough to offset the cost of renovation.
To learn how to design your dream home, watch our video by acclaimed architect Todd Hallet with TK Design here:
Contact Novi Real Estate Agent, Tracy Wick
Tracy Wick, SRES, MUP is a Novi real estate agent with over 25 years of experience as a real estate consultant and client advocate in Michigan. Tracy is an Associate Broker with Keller Williams and she can help guide you through your new home search and help you determine if a fixer upper home is the right choice for your unique situation. Find more articles on buying, selling, elder transition and estate settlement at TracyWick.com or contact her directly at 248-912-7407 or firstname.lastname@example.org