Buying a Fixer-Upper
Right At Home Daily:
Finding It: Buying a Fixer-Upper
By Jim Sulski for Right at Home Daily
Why do People buy Fixer-Uppers?
They're looking for a real estate investment: Buy a home
that needs work, throw some time and money into it, and then sell it for a profit.
Fixer-uppers are a way to buy a home in a preferred neighborhood
that may otherwise be out of reach financially.
Fixer-uppers
also allow buyers to create their own space. Most new homes are designed
for the greatest common denominator. Fixing up an existing home allows you to
personalize your living environment.
But be careful: A fixer-upper can easily turn
into a money pit, which is a nightmare for those homeowners on tight budgets.
And, fixer-uppers not only drain cash, but time.
Those home improvement TV shows in which a kitchen is magically
transformed from a prison cell into a candidate for the pages of Architectural
Digest are more fantasy than reality.
The truth is, shaping up a fixer-upper can take weeks or
months, if not years. That's a lot of weekends spent with a tool belt strapped
to your waist.
TAKE IT AND RUN
If you're thinking about buying a fixer-upper, here's what
you should be looking for:
- A home that needs cosmetic work (i.e. painting, wallpapering,
replacing kitchen appliances, and ripping out orange carpeting from the early
1970s).
- A home that only needs minor structural repairs, such as
replacing a roof, furnace or electrical system. The home might also have a kitchen
and bathrooms that are functioning but need updating.
- A home in a desirable neighborhood that is selling for
at least 25 percent less than comparable homes simply because of its condition.
- Be wary of fixer-uppers located in an overheated market.
If you buy a fixer-upper for $150,000 and spend $100,000 getting it into shape,
you may wind up with a house worth less than you spent.
Before you buy have a professional home inspection.
- If the home needs a lot of heavy-duty work, have a contractor
give you an estimate of costs before making an offer.
- Loans such as the FHA 203K can offer you extra cash to
use for home improvements beyond what you need to buy the home.
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