What are the pros to buying a fixer upper?
So one of the pro's is that you can customize the home, choose your flooring, cabinets, countertops, light fixtures, etc. Bringing the quality of the home up to the level of the neighboring homes will help the property appreciate much quicker. Usually, tax's will be lower since this is based on assessed value.
Then there are the cons.
The cons would be problems with the home that you can not see until you start your renovations. Like structural issues, plumbing or electrical problems. If you can not do the work yourself it can be very costly to have someone do the work. The amount of time it will take to get the home ready to be moved into.
So here is an example of buying a fixer upper.
One of my buyers was determined that she would find a home for cheap and renovate it. When you don't do your homework and have no idea as to cost of repairs this can be a problem. I will say yes it is great to be able to customize the home, but again do you have a crew that can do the work for a good price. I stopped by to see what the progress was on one of the homes I sold, and the home had all new windows and doors including garage doors. The rooms have been reconfigured and they had most of the materials to finish the home. One of the main problems is that they are not tile layers, plumbers, electricians, or roofers. They have to hire people to do the work and are looking for the least expensive contractors. At this point, they have spent just as much on the renovations as they did on the home and it is still not complete. So wouldn't it have been easier to just buy a home that was already done rather than inconvenience yourself by living in a work zone?
One way to finance renovations would be a 203K loan. These loans are given on homes that need renovations. The way they work is you get estimates on the work that needs to be done and this is submitted to the lender. This is probably a better way to actually know what the renovations will cost and whether it is worth purchasing the property.
For more information on 203K Loans
This content created by Barbara VanderMeulen Lead Buyer Specialist
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