Buying a fixer-upper – a home that needs a little tender loving care to get up to snuff before your move-in date – can be both exciting and stressful. On one hand, you can transform the house into your dream home. On the other, it’s a costly and lengthy process to take on the repairs and updates to a fixer-upper.
The choice between a fixer-upper and a house that’s move-in ready can come down to several factors. Here are a few things to consider when a fixer-upper is the front-runner for your future abode.
The Cost
One of the perks of buying a fixer-upper is that you can completely gut the house and build the kitchen and walk-in closet that you’ve been lusting for, alongside other renovations. Fixer-uppers are clean slates to be customized to fit your needs and desires, space permitting, of course.
Sellers know that these types of homes require buyers to put in work before moving in, so fixer-uppers are often listed below market value in order to attract offers. Though these lower prices are enticing, it can escape your mind just how quickly renovation costs can add up. If you purchase a home that needs an updated electrical or plumbing system, as well as cosmetic changes, you could be looking at an expensive bill.
You may expect – and be excited about – putting thousands of dollars into constructing a brand-new kitchen. However, you may not be so keen to put that same sum of money into a beam to correct structural damage that none of your house guests will see. When considering a fixer-upper, you must be ready and willing to tackle more than just new coats of paint and replacing outdated features.
Before you place your bid, hire a contractor to do a walk-through of the home and jot down the repairs he/she recommends. From that, develop your budget and include the price of supplies. It’s also a best practice to include an additional 10% to 20% in case unforeseen problems arise.
The Time Commitment
Even if you have the funds to tackle the projects associated with a fixer-upper, you need to allot plenty of time to get everything done. So if you have to move within a specified amount of time – whether you have a lease that’s about to expire or you’ve sold your current home and a new family has set a move-in date – a fixer-upper may not be for you.
Whether you plan to tackle the repairs on your own or hire a professional, renovating a fixer-upper can take a considerable amount of time. Contractors could make mistakes while on the clock, resulting in a need to redo the work, or they could simply miss deadlines. And if you’re taking on the fixer-upper on your own, it may take double the time it would for a contractor to do the same work, especially if you’re an amateur. Give yourself plenty of time to get the house squared away before you plan on moving in.
The Stress
Both mental and physical stress, can weigh on you if you purchase a fixer-upper.
Some individuals love DIY projects. If you fit that mold, a fixer-upper home is a fantastic opportunity for you. You’ll be even more excited to host dinner parties when you get to tell your guests about all the renovations you tackled on your own.
But DIY renovations on a fixer-upper can result in more frustration than you thought possible, as well as cuts, bruises and soreness. The process of rehabilitating a home is not for the faint of heart. Be sure to consider the physicality, financing and likely stress that come with a fixer-upper.
Keep in Mind
Although there are a lot of risks associated with purchasing a fixer-upper, there can be plenty of rewards, too.
If you have the funds, time, skills and determination, a fixer-upper is a great option, as it can mean your dream home for a smaller mortgage (since the cost of the home is listed as lower than one that’s move-in ready). Plus, you could qualify for renovation loans, such as Federal Housing Authority 203k loans, which can be applied to a wide array of renovations to render the home habitable. Lastly, renovations that increase the home’s value can lead to quicker equity, meaning that your net worth could see a boost and you could refinance sooner, if necessary.
Increasing the value of the home means that it would cost more to rebuild your house in the event that it’s destroyed. Because of this, you may need additional dwelling coverage. Discuss this with your home insurance provider and remember that this increase may mean higher premium costs.
Shannon Ireland writes for SafecoInsurance.com and HomeInsurance.com, an online resource for homeowners and drivers across the country. Offering comparative automobile and home insurance quotes, consumers rely on HomeInsurance.com for the most competitive rates from the top-rated insurance carriers in the country. The HomeInsurance.com blog provides fresh tips and advice on a range of financial topics to help homeowners and homebuyers make educated decisions about their insurance purchases.
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