Over the last several years, there has been a major increase in television shows specifically devoted to shadowing the process of buying and fixing up, well, "fixer-upper" homes. And I know, they are fun and addicting and they make everything look so easy and beautiful. The creativity; the possibilities. So with that, came an understandable increase in home buyers that are interested in purchasing properties that require a significant amount of work. And not always as investment properties - but for personal use.
There are many benefits to this. Often these types of properties reflect a fair price for its condition so a buyer may get an affordable option for what I like to call, "good bones" - or a nice structure to start with. Your local real estate agent can provide you with current home values and comparables in your market.
Off of that, buying a "fixer-upper" home implies customization. Usually, when someone is buying a home with the intention to completely renovate it, that leaves a lot of room to create what is useful and convenient for the buyer. I believe you should fall in love with your home, or its potential, at the very least and preparing to customize allows a buyer to create their version of "perfect."
That can be very fun - but remember, any time you purchase property, regardless of the intention, you are making an investment. You own something that's value increases and decreases over time - and while there are so many factors that go into the actual appraised value - the maintenance of the property definitely plays an influential role in its overall appeal.
Basically - you just want be careful of over-personalizing and over-investing in your home, so much so that it will be difficult to sell and recoup your investment. Your real estate agent is a crucial resource in understanding the demand of the local market.
So - here are some tips and questions I ask my buyers to help them decide if buying a "fixer-upper" is right for them:
1. Your "Handiness" Level - Really, how "handy" are you? The specific work needed for fixer-uppers can vary from things like cosmetic paint and changing counter-tops or fixtures, to electrical problems and slab leaks. It's crucial to understand and never over or underestimate what you, yourself, and any team you may be bringing in is capable of. Know your limits and be honest with yourself.
2. Do Your Research - DO NOT assume anything. You must check local ordinances and zones to make sure the plans you have for the property are able to be done. It is important to have the correct permits for the work being done to your property and those regulations can change per municipality. It would be a good idea to speak to your local realtor to understand in depth what types of permits you need and when you need them, in the areas you are looking to purchase the property.
3. Be Prepared - In doing your research, make sure you account for title searches for possible liens. Many auctions, in person or online, often offer little ability to due diligence. It is important to be prepared for major possible damage. Sewage problems can be expensive and timely to re-mediate. Also, many auctions require a higher down payment if not a complete full cash offer. Do the most amount of research you can.
4. Hire A Professional - Regardless of your level of “handiness” you will need professional help. I say - start with a professional realtor to begin your home search and understand market value. Before you purchase, your realtor should suggest a professional home inspection by a professional home inspector. This will allow you to understand the true condition of the home. At that point, you'll have a much more thorough idea of what other professionals you might need to recruit.
5. Be Realistic on Time - On TV, it sometimes looks like a full home renovation can take hours. And while there are certain repairs and improvements that can be done quickly, prepare that your home may take some time before it is fully functional to your standards. And honestly, some work shouldn't take just days. You want to ensure things are set and safe before the dogs and the kids are running around!
Fixer-uppers can be great investments and the process can be very creative and exciting. But like anything, it is always important to go about these types of ventures responsibly - prepared and with knowledge.
Whether you are converting a property into your dream home, or a flip for a quick profit, never underestimate the importance of the right preparation, financing, and team.
And with that, if you're ready, then what are you waiting for?! Go call a local real estate agent and begin your home search today!
BROOKE HENDERSON Global Real Estate Advisor
ENGEL&VÖLKERS • Monmouth County, NJ
Phone: +1 732 709 7161
Internet: www.brookehenderson.evusa.com
Email: brooke.henderson@engelvoelkers.com