Is a Fixer-Upper for You? 5 Things to Keep in Mind Before You Commit

By
Real Estate Agent with Keller Williams Capital Properties DC AB15253

 

Many buyers start their home search with the idea that a fixer-upper will save them money, make them money and give them their dream home all in one.  Unfortunately, many discover that buying a fixer-upper home isn’t for everyone. An older house with a lot of character may look great, but a professional inspector may find issues that make it a more expensive home than you think.  In addition, you may discover that that fixer-upper brings repairs that are beyond your abilities.  You need to be sure that you have the right mixture of skills and the finances to carry out the repairs.

Here are somethings to consider before you leap into buying that fixer-upper “dream home:"

Talk to Your Lender About the Costs

The idea of saving money as you buy and making money as you sell motivates lots of buyers considering a fixer-upper.  There are the lipstick on the pig fixer-uppers and then there are the total gut and rehab projects.  You can probably handle the expense of the lipstick on the pig home in your monthly budget - a new stove this month, three gallons of paint next month.   If it involves major outlays like building or moving bathrooms or finishing off a basement and you have no construction skills, you need to talk to your lender about how you are going to pay for your dreams.  Big projects are expensive and if you don't roll their costs into the initial financing, you are going to be paying for them with cash out of pocket.  That can be very expensive and slow down the pace of your renovation.  Do you really want to be living in a home with walls torn out and pipes exposed while you are saving money for the next project?  Talk to your lender about the possibility of a renovation loan like a FHA 203K loan.  Be mindful that in the midst of the COVID-19 pandemic FHA 203K loans are harder to get and will slow down the loan process.  In short,  make sure you know how you are going to pay for your dreams so they don't become a nightmare. 

 

Major Issues
Plumbing, electricity, the roof and structural issues in the foundation are some things a home inspector should prioritize. They’ll advise you on what you need to replace immediately, what you can wait on or what you don’t need to fix at all.  The inspection will help identify those issues which are going to cost you money up front.  Even though you are planning on renovating that fixer-upper, you definitely do not want to skip the inspection.  You might think that the property is a lipstick on a pig fixer-upper only to discover that it is a signficant renovation with structuaral faults that will cost big money.

Walk through the house with the inspector and check on the expected lifespan of the various home systems. If an air conditioner, furnace or other major item needs to be fixed, get a cost estimate before proceeding with the home purchase.

Home Additions
Buying a fixer-upper can mean more than repainting the walls or remodeling the kitchen. If it doesn’t have enough room, you may want to add on to the house. Or, you may just want to knock down a wall to expand the kitchen. Is that a load-bearing wall? Can it safely come down?

Check with your city’s building department to see if you can expand.  Factor the cost of applications, permits, inspections and the time delay into your budget and your plans.   If the home is in a historic district that could limit modifications.

Ask a Contractor
Before buying a fixer-upper home, hire an architect or contractor to look at the house with you so they can give you estimates on repairs or additions.

Many contractors will give you bids for free, so you should get a few opinions before deciding who to work with. Architects may charge an upfront fee.

Tax Incentives
Some cities offer tax credits for improving their property value. If the home is in a historic district, there might be tax benefits to restoring it to its original condition.

The local power company may offer rebates for installing solar panels, dual-pane windows or other energy-saving features. State and federal governments may also offer tax rebates for energy improvements.

The bottom line is don't let the low price of a fixer-upper house entice you too much. There could be problems under the surface that may put it well beyond your budget.

 

If you are looking for a dream home - whether a fixer upper or a renovated home - give the Lise Howe Group a call at 240-401-5577 or email us at lise@lisehowe.com

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Brian England 05/19/2020 10:53 AM
Topic:
Home Buying
Tags:
fixerupper
buying a fixerupper
lise howe group

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Rainmaker
3,445,357
Nina Hollander
Coldwell Banker Realty - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Good morning, Lise... I've always found that most people who want to get into a fixer-upper really have little idea of what's involved and how to think about the process. (Same for those who think it's easy to buy a lot of land and just pop a house on it!)

May 18, 2020 07:56 AM #2
Rainmaker
3,404,317
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Happy Monday Lise,  I know some people think it would be grerat to buy and fix up a fix up property only to discovered it cost more to do.

 

May 18, 2020 08:46 AM #3
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Paul S. Henderson, REALTOR®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

Some of my clients need to read this blog post. For some reason it looks so much easier on a half hour HGTV flip show.

Happy Monday morning Lise Howe 

May 18, 2020 09:19 AM #4
Rainmaker
2,136,762
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good afternoon Lise Howe - a very good treatment on the topic.  It is not as easy as watching HGTV.

May 18, 2020 10:13 AM #5
Rainmaker
1,823,425
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Grant Schneider - I have clients who can't even manage the lipstick on a pig fixer-upper 

May 18, 2020 11:33 AM #6
Rainmaker
1,823,425
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Paul S. Henderson, REALTOR®, CRS - don't you just hate HGTV - it has made every tv viewer a home decorator and a general contractor

May 18, 2020 11:34 AM #7
Rainmaker
1,823,425
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Nina Hollander - I try to make people understand that if they buy the house already done - they get the mortgage deduction - if they pay for the renovations themselves they are using after tax dollars - it costs a lot more! 

May 18, 2020 11:35 AM #8
Rainmaker
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Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Will Hamm - I love the ones who want to buy a fixer-upper and they have a baby on the way! 

May 18, 2020 11:36 AM #9
Rainmaker
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Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Roy Kelley - thanks for your kind words of support - they are always appreciated

May 18, 2020 11:37 AM #10
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Lise you made very good points on why a fixer upper is not for most people.  To top it off the 203K Rehab Loans are very tough to get right now, if they are even available at all.

May 18, 2020 01:46 PM #11
Rainmaker
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Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.  Stay safe.

May 19, 2020 03:17 AM #12
Rainmaker
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Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

George Souto - thanks for your comment - I went back and edited the post to reflect your information

May 19, 2020 06:07 AM #13
Rainmaker
1,823,425
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Richard Weeks - thanks so much - I hope you have a great day!

May 19, 2020 06:07 AM #14
Rainmaker
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Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Lise - reality television shows may look exciting but there are behind-the-scenes issues that need to be identified that are real.  Preparation and upfront knowledge is necessary prior to tackling such a project.  

May 19, 2020 07:44 AM #15
Rainmaker
2,880,086
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

Fixing up a home is fun to do, but one definitely needs to know what they are getting into unless they have unlimited funds to spend, haha.

May 19, 2020 08:12 AM #16
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Jeff Dowler, CRS
eXp Realty of California - Carlsbad, CA
The Southern California Relocation Dude

Hi Lise:

You've shared some very sound advice here. Fixers are definitely not for everyone, for a host of reasons. Unfortunately some approach their search with a fixer at the top of the list, hoping for a great "deal" but without taking into account the other issues - amount of repairs, costs, living in the home while renovating, and more.

Jeff

May 20, 2020 09:15 PM #17
Rainmaker
991,192
Thomas J. Nelson, Realtor e-Pro, CRS, RCS-D, Vets
Big Block Realty 858.232.8722 - La Jolla, CA
& Host of Postcards From Success Podcast

Great post. The Mills Act here in San Diego certainly encourages (tax breaks) historic home restorations. I've never bought move in ready, all my homes were fixers to date. I like the projects that make the house your home. 👍

May 21, 2020 07:36 AM #18
Rainmaker
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Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

I got a great tax break when we bought a small apartment building with a historic facade -so that is a wonderful point! 

May 21, 2020 07:42 AM #19
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Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Lise- Some of the cable shows make it look easy but you never know what you're going to run into. You've offered some excellent tips for anyone who is considering a fixer upper. 

May 21, 2020 02:32 PM #20
Rainmaker
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Rebecca Gaujot, Realtor®
Vision Quest Realty - Lewisburg, WV
Lewisburg WV, the go to agent for all real estate

Lise, I do admire people who want to buy a fixer-upper and CAN do the job. Myself... no way! Have a fantastic weekend!

May 22, 2020 06:04 AM #21
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