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Have you ever thought about buying a fixer upper and flipping it for profit?
Or are you currently searching for a home for yourself and toying with the idea of investing in a fixer upper?
If you answered yes to any of the questions above, stop everything you’re doing and read this article first!!!!
Almost anyone can find a fixer upper, but not everyone can cut a good deal on the right fixer upper.
If you’re planning to invest in a fixer upper, you’ll have to look beyond the surface of the structure to make sure you’re not buying a property that is sitting on a time bomb, just waiting to collapse.
But if you invest in the right fixer upper, you can make hundreds of thousands of dollars or even millions and smile all the way to the bank.
But how would you know if you’re investing in the right fixer upper or not?
One of the easiest ways to find out is to ask real estate experts. So I asked several realtors about what to consider before investing in any fixer upper.
And here is what they have to say….
10 Things To Consider Before Buying A Fixer Upper
1. Consider The Location of the property
Location is probably the single most important thing to consider before investing in any real estate property. If the house you’re planning to buy is in a stale part of town, it may be extremely difficult for you to get a good deal on it when it’s time to sell.
“The Golden rule of location/school district still trumps all else. Regardless of how much money you have to create a diamond out of a piece of coal. NO ONE will buy it at a higher price point if it doesn’t retain the higher price in the future,” says Dawn Detelich of Dawn Detelich Realty.
I’ll say don’t buy a fixer upper that will do your finances more harm than good.
According to Amy Hite of Perry Wellington Realty “Making sure you check with the township or city is key. There are some areas that require permits, and licensed contractors to complete the work. Those costs will add up if you do not budget for them.”
Before you buy any fixer upper, do some research about the location of the house. Find out if people are moving in or out, if startups are springing up around town or if businesses are closing down. Look around, is the house in a historic city or a tourist city?
All these are tell-tale of what you should expect and how the fixer upper would be valued in the future.
2. Inspect The property
According to Bryan Sebring of Sebring Services “When purchasing a fixer upper, it is important to fully assess the property. Whether you are hiring a contractor or doing the work yourself, make sure to get a highly rated home inspector to fully detail what you will need to address after purchasing the home.”
But what exactly should you lookout for during inspection?
“The most important areas to focus on when doing the walk through are the electrical wiring, plumbing, and the HVAC. Some other areas to focus on are the roof, chimney, foundation, windows, doors, and flooring,” Bryan said.
“After assessing the scope of the projects, you will then need to decide if the cost of the property will allow enough room for the necessary updates that will need to take place.”
3. House Plumbing System
How good is the plumbing system of the fixer upper you’re planning to buy? Is the house plumbing system made of galvanized piping and cast iron?
If so, they must be replaced after 50 years to prevent leaking and ensure good water quality. Plumbing is one of the most expensive repairs and they can cost the most damage.
“Things that are not visible, or are hidden, are called ‘latent defects’. One example of this is hidden water leaks, or intrusions, that have either gone unnoticed by previous owners, or have been concealed with a fresh coat of paint,” says Jason Martin of NCH Online.
Think about how much you’ll have to spend on replacing the entire plumbing system of the home.
If possible, invite a professional plumber to assess the plumbing system before you make up your mind. You can’t be too careful!
4. Kitchens and Bathrooms
Chances are the kitchen and bathrooms will take a huge chunk off your remodeling costs. So just before you sign a fixer upper deal, see the kitchen and bathrooms.
Do a simple math, count how many kitchens and bathrooms are in the entire house and consider how much it will cost to give each of them a face-lift.
A beautiful productive kitchen and a nice bathroom will increase the value of your home, so don’t fret over the remodeling costs.
5. Electrical System
Poor or damaged electrical system can cause fire easily and chances are a fixer upper will burn down quicker than a standard home.
“Utilities is always a concern when considering your repair costs – Plumbing, Electrical, Gas. Make sure there are no major repairs or works that are not permitted in these areas. This could be very costly to correct,” says Timothy Griggs, of Griggs Mutual Realty & Management.
Before you write that check, consider the costs of fixing or upgrading the electrical system.
If the cost of fixing the electrical system is fairly good, make sure electricity is at the top of your remodeling list when the face lifting work starts.
6. Foundation Issues
A fixer upper may look fairly good on the interior and exterior, but what about its foundation? I bet you wouldn’t want to buy a home that can cave in within the next one year.
During inspection, carefully check the foundation of the fixer upper.
“Be sure there are no foundation or structural problems. Look for sloping floors. This could be another major expense,” says Timothy Griggs, a Realtor at Griggs Mutual Realty & Management.
Do you have to fix the existing foundation or build a new one? Check if it has a crawl space and find out if water is seeping into the basement or crawl space. Also, carefully check the floor for visible cracks or if it is slanted.
Consider the cost of fixing the foundation or building a new one. Do the math and see if it’s worth your cash.
7. The Roof!
Timothy Griggs, a Realtor at Griggs Mutual Realty & Management says “Check the roof. Check inside ceilings for evidence of leakage. This is another major expense that could take you over budget”
Many roof require replacement every 20-30 years. If you’re planning to build a new roof, consider reinforcing the structure so it can hold the weight of the new roof.
Don’t pour a new wine into an old bottle!
“Look up. Do the ceilings sag? If so, this might suggest beetle in the rafters. Has the ceiling been papered over to disguise any cracks?” according to Richard Rawlings, President of Buyer Price.
8. Doors and windows
When you’re buying a fixer upper, check every part of the structure. Do not overlook the conditions of the doors and windows.
There are probably more doors and windows in the structure than you can imagine.
Consider how much it’ll cost to fix all the doors and windows or perhaps the costs of replacing some and fixing the rest.
- “Check the doors. Do they fit as well as they did when they were first fitted? If they snag at all then maybe something’s on the move. Check the top of an open door to see if it has recently been planed or sanded to ease a sticking point,” says Richard Rawlings, President of Buyer Price.
9. Landscape
Look around the structure, beautiful landscapes don’t hide. If the property has trees and other plants that makes it more beautiful, consider it an extra value for the fixer-upper.
“If the exterior is not pleasing and inviting and loaded with appeal – it is an uphill battle to get buyers in the door. If it doesn’t have immediate curb appeal and you don’t have the funds to turn it into “a looker,” DON’T Buy It! No one wants to buy the ugly house, says Dawn Detelich of Dawn Detelich Realty.
But if the landscape is covered with disease ridden trees and plants that you’ll have to cut down, it will be an extra cost on your renovation bill.
10. Budget
How much are you willing to pay for your ideal fixer-upper when you finally find one? How big is your renovation budget?
Amy Hite of Perry Wellington Realty says “Firstly, is it going to be worth it after repairs are made? If putting the home to fix a home up is not going to yield a return on investment, you need to choose another property.”
Think deeply, do your math carefully, consider all your options and conclude smartly.
You can have a huge return-on investment for buying just one good fixer-upper if you look carefully.
“After all, if the price of the property is too high for the value, then spending the time and money to update it may not make sense versus buying another property that would allow for the cost of these changes,” Bryan Sebring of Sebring Services advised.
“We need to have realistic expectations for repairs and costs. At any point in time you can run into an expected cost. You need to make sure you are financially prepared to have those costs,” Amy Hite advised.
Be realistic!
Investing in a fixer-upper can be a good business if you do it right. But you have to be very realistic before you can buy the right fixer-upper.
Some fixer-upper prices are just too good to be true, but you’ll have to look beyond the prices and consider renovation costs and what the value of the property can be when you’re ready to sell.
Before investing on any fixer upper, assess the property carefully before putting your John Hancock on the deal.
While you’re considering what fixer upper is worth your cash or perhaps while your fixer upper is being renovated, you may consider moving to a new home temporarily.
If you’ve bought a fixer upper, renovated it and ready to move in, contact MoverJunction.com. We provide up to 4 Free Moving Quotes of professional moving companies in the United States. Let us match you with the right mover.
Conclusion
“A home is too large of an investment to throw caution to the wind and hope that everything is ok with it, or to just take the seller’s word for it. For the relatively small amount you will pay for a quality home inspection – by a licensed, professional inspector, you could save yourself thousands of dollars in serious repairs,” says Jason Martin of NCH Online.
“Moreover, you could avoid a problem that may be hazardous to life and health. All of this could help turn your ‘fixer upper’ into an investment that could give you even greater return in the long run.”
