Should you spend less money buying a fixer-upper, or more money buying a fixed-up house? That is the question. While there are no simple answers to those questions, here are some tips that you should consider when making your choice:
1. Do the math.
One of the keys to determining whether or not to purchase a “fixer-upper” is to determine the cost of fixing it up. Get a professional appraiser to handle the task, to get an accurate assessment. The cost of fixing the house will vary, depending on the current state of the house. After the appraisal, you will have some concrete data to make a wise decision about whether you should fix up the house, or make it someone else’s headache.
2. Choose houses that need minimal repairs.
Fixing up a house does not have to require revamping it completely. It is advisable to look for houses that need a fresh coat of paint (interior or exterior), new carpeting, some basic plumbing, and so on. On the other hand, if a house needs major repairs then make sure that it is at a rock-bottom price, and suits your long-term housing plans.
3. Consider how much time and effort you have.
The amount of repair-work a fixer-upper needs can vary quite significantly. So besides determining how much work is needed, consider how much time and effort you are willing to spend. If you need a livable house sooner, then it might be a bad option. If you do not have the energy to do the needed repair-work on the house, then you should probably buy a new house instead.
4. Learn the housing trend in the area.
Fixing up a house in a good location is one thing. Fixing up a house in a bad location is not such a good idea. So before deciding whether or not you should buy a particular fixer-upper, determine if the house’s value would generally rise or fall afterwards. If the latter would happen, then you might decide that the funds needed to repair the home would not be worthwhile. On the other hand, if the houses in the neighborhood are generally appreciating in value, then it might be money well spent.
5. Consider your long-term housing plans.
Do you want to live in your next house for years or decades? Fixing up a house can be a lengthy and difficult process. The time, effort, and money required might be too much if you are not planning to live in a particular house for several years. Then again, the investment could be worthwhile if the repairs needed for a fixer-upper are basic ones.
6. Get thorough and multiple appraisals.
This is crucial when considering whether or not to buy a fixer-upper. Consider getting at least three appraisals, and then calculating the average of them. Besides getting multiple appraisals, you should always get thorough ones that include the roof, soil, and so on. Make sure when comparing appraisals that you compare apples with apples.
Is buying a fixer-upper the right option for you? The above tips will help you to make the best decision.