Tracy Wick
Chances are you have seen at least one of the remodeling programs on the HGTV channel.
The concept seems simple: Identify a home with potential, invest in renovations and the property value will skyrocket.
But tackling a fixer upper isn’t as easy as it seems on TV and there is no guarantee you can turn a profit with home renovations. So how do you know if you are up for the challenge? How do you determine if a fixer upper will be a sound investment?
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When buying a fixer-upper might be the right choice
Buying a fixer-upper is often a default move once you’ve been outbid a few times on picture perfect, move-in ready homes. These types of homes, with fresh paint, new kitchens, and amazing outdoor fire pits tend to attract multiple buyers and sell quickly, often for tens of thousands of dollars above the asking price. Looking at less desirable homes with good bones can be an “under the radar” way to get into a very desirable neighborhood or school district without all the drama. Here are three benefits to buying a fixer-upper:
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You want to customize the home to match your taste
One major benefit of purchasing a fixer upper is that you have more control over the design of the interior and exterior of the home.
A move in ready, or turn key home, may have bad appliances, no updating or remodeling needed. Even the aesthetics might be somewhat pleasing but you didn’t create it. You may find more satisfaction in choosing your own granite countertops, cabinets and flooring, especially if you enjoy decorating and have a good eye for design.
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Spend less money for prime locations
You know the saying in real estate, “Location, Location, Location.”
If you can find a home in a prime location at a significantly lower cost, you could extend your search to a zip code that you may not have been able to afford otherwise.
Also, the better the location, the higher potential you have to recoup your investment on renovations. So be sure to research the crime rate, school district and value of other homes in the area. A good Realtor can provide you with comps for investment grade homes and fully updated homes so you can understand the top price you can afford to pay for the house.
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You have construction knowledge and physical ability to complete renovations
As stated earlier, DIY home improvement projects aren’t as simple as they seem. They are time consuming, physically exhausting and there are building codes to comply with. For this reason, hiring a professional contractor is highly recommended.
However, if you have construction knowledge, are a contractor or are extremely handy, you will save a lot of money by not paying for physical labor. You will only incur the cost of materials and your time. If you are an experienced project manager, you may be able to act as the general contractor and save 10-15% of the total project cost.
Even if you do not have construction expertise, you can enlist the expertise of a designer and remodeler to better understand the costs associated with the updates you want to complete.
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Tracy Wick, SRES, MUP is a Seniors Real Estate Specialist in Michigan with more than 25 years of experience as a real estate consultant and client advocate. Tracy is an associate broker with Keller Williams and she can help guide you through your new home search ensuring that your most important transition is the right one for you. Find more articles on buying, selling, elder transition and estate settlement at TracyWick.com or contact her directly at 248-912-7407 or twick@kw.com
