Purchasing homes that need a fair amount of TLC is not for the faint of heart, but investors and everyday people do it all the time. But what exactly are fixer upper homes, and are they worth it?
What are fixer upper homes?
These are homes that are in need of serious work. Usually, you can tell at first glance that a home is deemed as a fixer-upper. Sometimes, they’ll only need cosmetic work done to update the interior. Sometimes the interior and exterior will need to be updated. Other times, they will consist of both cosmetic and structural updates that are needed.
Cost Of Fixer Upper Homes
These homes are typically less expensive than homes that are considered move-in ready, since they need work. Some people purchase these homes as an investment property to flip and rent out or sell. Other people purchase them to update and live in themselves. This way, they can customize the house to their liking. Although they’re less expensive than move-in ready homes, they are still priced according to location, size, etc.
Be mindful when you buy a home that requires work. You’ll need to account for renovation costs, as well as have extra money aside for any unforeseen repairs that may be necessary. You want to make sure that your fixer upper home is able to be renovated in a smart way so it doesn’t become a money pit. Make sure you look at the comps when looking at purchasing a fixer upper, and budget wisely. For example, if homes in the neighborhood are going for $500,000, and you find a fixer upper in the neighborhood for $300,000, it is probably a smart buy. However, if that home is $475,000, and needs a substantial amount of work, it wouldn’t provide a great return on investment. You could even potentially lose money on the deal.
How To Find A Fixer Upper Home
You may be ready to commit to purchasing a home and restoring in a new and improved way, but how will you find the right house to fix up?
Simply Drive Around
You can start by just simply driving around target areas you’re interested in, and looking for them. Look for overgrown lawns, neglected exteriors, crumbling siding, etc. These may be signs that the interior of the home is rough since the exterior is.
Check The MLS
This is the main tool your agent will use, whether you’re looking for fixer upper homes or move-in ready properties. If homes are underpriced, have been on the market for a long time without a buyer in a seemingly nice neighborhood, or even short sales are good signs that the home is a fixer upper.
Look Up Local Tax Records
These are generally public record. After you decide the target area you want to buy a fixer upper in, you can visit the area’s municipal website to access information pertaining to homes where the taxes haven’t been paid. Even though this doesn’t always indicate that the home will be a fixer upper, it is a sign that there are financial difficulties on the owner’s end, so there may also be some neglect to the house. Keep an eye on these homes, as they may be for sale in the near future.
These can be risky, as you typically need to buy the house sight unseen, as-is condition, and for cash. However, they are heavily discounted homes and if you do your homework, you may just find the perfect investment opportunity at foreclosure auctions.
Although there can be great risk with purchasing a fixer upper, there can even be a greater reward. If you are buying or selling a home, or want expert real estate advice, our agents at Trelora can help guide you through the process. Whether you want a fixer upper, or a move-in ready home, we’re here to help.