Buying A Fixer Upper House: Pros and Cons
Embracing the allure of a fixer-upper is like embarking on a journey of transformation, where the canvas of a household’s endless potential for your unique vision comes to life. The prospect of turning a neglected gem into a personalised haven is undeniably exciting, but it also comes with its own set of challenges and considerations. In this blog, we’re delving deep into the world of buying a fixer-upper, exploring the tantalising pros that beckon dreamers and the pragmatic cons that demand careful thought. Whether you’re a seasoned DIY enthusiast or a first-time homebuyer, understanding the intricacies of this path can help you make the right decision that aligns with your aspirations and resources. So, grab your toolbelt of curiosity as we navigate through the possibilities and complexities that come with breathing new life into a fixer-upper home.
What is a Fixer Upper House?
A fixer-upper house is a property in need of renovation for sale. These homes often have outdated or damaged features, such as old electrical or plumbing systems, worn-out flooring, or deteriorating exteriors. You may also see them referred to as doer-upper houses. Fixer-uppers typically come with a much lower price tag than those homes that are considered move-in ready, and that makes them an attractive choice for buyers who are looking for a long-term project or want a quick way to build up some equity in a property. While they may require a substantial investment of time, money, and effort, fixer-uppers offer the opportunity to create a personalised and customised living space, tailored to the buyer’s specific tastes and preferences. With the right vision and resources, a fixer-upper can become the beautiful, valuable space you want.
The Advantages of Fixer Upper Houses for Sale
There are many different reasons people consider buying a house to renovate. One of the most significant advantages of buying a fixer-upper home is affordability. Typically priced lower than move-in-ready properties in the same neighbourhood, these homes offer the perfect way to get started in the real estate market and begin to build equity. With a lower purchase price and a renovation budget, you can create a beautiful home that suits your style, all the while increasing its value.
The ability to personalise the home is another huge advantage. Imagine having the freedom to design and customise your home entirely to your liking. A fixer-upper allows you to put your creative hat on and transform a property into a reflection of your unique personality and taste. From choosing the kitchen layout to selecting the fixtures and finishes, every decision you make adds a personal touch. This level of customisation provides immense satisfaction and a sense of accomplishment that can’t be replicated with a move-in ready house.
For many, the idea of a true investment is the draw to a fixer-upper. After all, you’re buying a fixer-upper, meaning it’s not in great condition now, but at some point, it certainly could be. While it may seem like a daunting task at first, renovating a fixer-upper can significantly increase its resale value. By investing in essential upgrades and repairs, you can modernise the property, making it more appealing to future buyers and driving up its market value. A well-executed renovation can lead to a substantial return on investment, making it a lucrative option for those looking to build equity and potentially make a profit in the future.
You also have complete control over the process. If you’re buying a new build or a home that’s already been renovated, that’s not always true. Purchasing a fixer-upper allows you to take charge of the renovation process, enabling you to work at your own pace and budget. You have control over choosing contractors, deciding which projects to tackle first, and even the ability to DIY certain aspects if you possess the skills. This flexibility ensures that you can work within the confines of your resources and schedule, making the entire experience more manageable and personalised.
Choosing a fixer-upper house may also put you in a better location. Sometimes, your dream neighbourhood might be out of your price range when it comes to move-in-ready homes. However, a fixer-upper can grant you access to your desired location at a more affordable price. By investing in a property that needs some TLC, you can end up in a sought-after neighbourhood, which may offer better amenities, schools, or proximity to work.
The Disadvantages of Fixer Upper Houses
While there are many advantages to owning a fixer-upper, there are certainly some drawbacks as well. One of the most significant disadvantages of buying a fixer-upper is the potential for unforeseen costs. Even with a thorough inspection, there may be hidden issues within the structure that can quickly escalate your renovation budget. It’s crucial to be prepared financially and have a contingency fund in case unexpected problems arise.
The time involved can be a big drawback for many people too. Buying a fixer-upper means taking on a significant project that requires time and effort. Renovations can disrupt your daily routine and become all-consuming, particularly if you’re doing the work yourself. You’ll need to be ready to invest a considerable amount of time and energy into transforming the property into your dream home.
There’s also emotional stress to consider with the fixer-upper. Living in a construction zone can be emotionally challenging, especially if you’re residing in the house during renovations. Dealing with noise, dust, and the constant presence of contractors can be overwhelming and take a toll on your well-being. It’s important to consider whether you have the patience and resilience to handle the emotional stress that comes with a fixer-upper.
As a result of the stress and time involved, it’s essential that you consider the cost of the opportunity of buying a house to renovate and sell or simply to renovate and craft into your dream home. The time and money spent on renovations are resources that could have been used elsewhere, such as building equity in an already functional home or investing in other ventures. It’s crucial to evaluate whether the potential savings of purchasing a fixer-upper outweigh the opportunity costs.
Financing can be a frustration, too. Obtaining financing for a fixer-upper can be more challenging compared to purchasing a move-in-ready property. Many lenders are often unwilling to finance a property with significant renovation needs. Additionally, the renovation process may require additional financing, such as construction loans or personal loans, which can come with higher interest rates. It’s essential to consider the financial implications and potential difficulties associated with securing financing for a fixer-upper.
Housing type can matter too. Not all fixer-uppers are desirable property types, and this can especially matter when you’re looking for a property that you can repair and sell. For example, the disadvantages of a bungalow available for renovation may include lower resale value because of property type alone as well as design and layout restrictions. Think carefully about the property type if you decide to move ahead, as some properties may be better than others when it comes to renovation.
How to Find Houses that Need Renovation
If, even after exploring the disadvantages, you’re still looking for a house to renovate for sale, there are many different ways to find them. Initially, you’ll want to find the perfect estate agent to help. A reliable estate agent can be an invaluable resource when it comes to finding properties that need renovation. They have access to databases and networks that can provide you with listings specifically tailored to your renovation requirements. Be clear about your budget, desired location, and renovation goals when communicating with your agent.
You may also want to utilise popular online property portals to search for houses in need of renovation. Websites like Rightmove, Zoopla, and OnTheMarket allow you to filter your search to find properties with renovation potential in your desired location. You can save your searches and even create alerts so you know when properties that meet your needs become available.
Property auctions are another great resource as you search for the perfect home to renovate. Property auctions can be an excellent avenue for finding houses that need renovation. Auctions offer a wide range of properties, including those in need of repair or renovation, often at competitive prices. Research local auction houses in your area and stay updated on upcoming auctions. Be sure to do your due diligence and thoroughly inspect the properties before bidding.
Your local council could have some helpful information as well. Contact them or nearby social housing departments to inquire about any properties in their possession that need renovation. Occasionally, these organisations have houses that have fallen into disrepair or need significant upgrades, and they may be willing to sell them for renovation purposes.
Networking with others may also be helpful. Engaging in networking opportunities, both online and offline, can connect you with individuals who may have insights into properties that need renovation. Join online forums, social media groups, and attend local property networking events to meet like-minded individuals, including homeowners, property developers, and investors, who may have information about potential renovation projects.
What You Should Do BEFORE You Buy Houses in Need of Renovation
While the prospect of transforming a property to fit your vision can be exciting, it’s important to carefully prepare. Start by evaluating your budget. Before embarking on the journey of buying a home that needs renovation, it’s crucial to establish a realistic budget. Figure out how much you can afford based on both the purchase price of the property and the renovations themselves. Leave room for unexpected expenses and factor in additional costs such as permits, labour, materials, and design elements.
Simultaneously, you’ll want to evaluate your own skills, time availability, and resources in relation to the renovation project. Be honest with yourself about what tasks you can undertake and what will require professional assistance. That starts when you take a look at your skills and experience related to specific kinds of tasks like plumbing, flooring, and electrical projects that your fixer-upper will likely require. With each, ask yourself two key questions:
Have you successfully completed similar projects before?
Do you have the necessary tools and knowledge to handle potential challenges?
Be realistic about your abilities so you know what you’ll be able to handle and what you won’t. It’s okay to factor in the complexity of each project. Some projects, like painting walls or installing shelves, might be relatively straightforward for a DIY enthusiast. However, more complex projects involving structural changes or electrical work might require professional expertise.
You’ll also want to evaluate your own risk tolerance level. How comfortable are you with the possibility of things going wrong? DIY projects can encounter unexpected challenges that may require expertise to overcome. Professionals have the knowledge to handle these situations.
Keep in mind that it’s okay to use a hybrid plan to approach your fixer-upper. In some cases, a hybrid approach works well. You could tackle simpler tasks yourself and hire professionals for more complex parts of the project. This way, you maintain a balance between cost savings and ensuring quality work.
Once you know what you’ll need help with, you may want to begin to research professionals in those areas who could be part of the team you turn to as you take on each project in your new home.
Evaluating what you can and cannot handle, though, is only one part of the equation. After you’ve found a home you’re ready to buy, you’ll want to hire a qualified RICS surveyor to thoroughly assess the property’s condition. They will identify any structural issues, electrical or plumbing problems, or other hidden defects that may impact your renovation plans. This inspection will help you determine the true extent of the work required and avoid any unpleasant surprises after purchase.
As you search for the right inspector, keep in mind that there are different kinds of home surveys you could order for the property. A condition report is the most basic and affordable survey. It provides a “traffic light” rating system to highlight the condition of different aspects of the property. It’s suitable for newer properties or homes in good condition where you want a brief overview of the property’s condition. This is not the kind of thing to get for a fixer-upper property, though.
A HomeBuyer report provides more detailed information about the property’s condition. It includes the same “traffic light” ratings as the Condition Report but also highlights important issues that might affect the property’s value. It’s suitable for properties in reasonable condition that may need some attention. If the property you’re considering only needs a few things, this should work. If the one you’re considering, though, is a true fixer-upper, you may need much more. You may need a Building Survey.
A Building Survey the most extensive of these surveys is suitable for older properties, larger homes, or those with complex issues. It provides a detailed assessment of the property’s condition, including advice on necessary repairs, maintenance, and potential future problems. This survey is particularly useful for older properties or properties that have had significant alterations. This is ideal when you’re considering buying a fixer-upper.
Once you have a clear understanding of the work needed, create a comprehensive list of all the renovation tasks required. From there, research and gather quotes from contractors, suppliers, and service providers to estimate the potential cost of each renovation component. This will help you determine if the investment aligns with your budget and if the final outcome is financially viable. At the same time, think about permits for the work. Depending on how big the project is, you may need approvals from local authorities. Research the specific requirements and regulations for the area where the property is located. Factor in the time and cost associated with securing permits into your overall renovation plan.
The final step in the process is finding the financing to help you pay for both the cost of the property and the renovation. Determine the most suitable financing options available to you for purchasing the property and funding the renovations. Explore options such as renovation loans or lines of credit specifically designed for renovation projects. Consult with lenders or mortgage brokers to discuss your financial situation and find the best solution to fit your needs.
There are likely many different loans you can choose from. One is a Home Renovation mortgage. This is not like a traditional loan. Instead, you borrow money both for the property and the cash you’ll need to complete your renovations. Typically these are based on the hopeful post-renovation property value. It’s important to note, though, that these can be tough to obtain if the home is derelict, or uninhabitable because there’s no functioning bathroom or kitchen, or conversion might be required.
Another option is a buy-to-let mortgage if your fixer-upper will just be an investment property. You must have a good credit record for a mortgage like this one, and you will need to provide a solid employment record too. You’ll also need a 25% deposit on a loan like this one.
You can also get a conventional mortgage if you don’t need additional money to help with the costs of renovations. In some cases, you may want to take this option, then take out an additional loan later to help with the overall cost of renovations.
For almost all of these loans, you will need a fairly high deposit. You will also need to discuss the fact that you’re considering purchasing a property that needs work with your lender, as they will have a valuation done on the property, so they’re certain to notice it needs some work. It may be a good idea to work with a mortgage broker if you’re considering getting financing for a property like this one, as a broker can help you look at a number of different mortgage options with a single application. That will help you review several different options and come up with the perfect one to help finance the property of your dreams without having to talk to many different lenders.
Buying The Perfect Fixer Upper
Purchasing a fixer-upper house or estate can mean a big commitment, but it comes with some serious benefits too, like the ability to design the house of your dreams for less. The meaning of fixer-upper is a complete change, and that can be great if you’re looking for an ongoing project that puts you at the helm of that change. The reality, though, is that if you’re asking yourself “Is it worth buying a house that needs that much work,” this may not be the right choice for you. Houses that need renovation for sale mean a commitment, not everyone is willing to make. Ensure you truly understand what you’re getting before you make that purchase.