For many first-time buyers, getting a great deal on a home that needs a little work may seem like a cost-effective plan. However, there are many things to consider before closing on a fixer-upper.
Location is everything
First, consider the neighborhood. If the home is located in an ideal neighborhood, you may have found a winner. Once fixed up, it’s likely that the neighborhood will help to elevate the price of the home. If the listing is in an area with a high crime rate, or surrounded by other similarly outdated or unkempt homes, you are less likely to make a significant profit once you’ve fixed up the home.
Determine repairs with an inspection
Second, think about the necessary repairs. Some of the money you save on this home will be needed for updates, but you should make sure the home isn't in need of major renovations. Plumbing, electrical, heating and cooling systems can be extremely expensive to replace. Determine the budget you have for the home purchase and any updates, and be sure the home is in need of repairs you can afford.
Have the home inspected before making a final decision, as this can reveal exactly what repairs should be made by the seller, and what can wait until after the purchase. Inspectors can also provide you with an estimate on how much these fixes or repairs will cost you, so you can ensure you stay within your above budget.
Dig into your personal preferences
Last, think about what kind of person you are. If you’re buying a home because you want to come home after work and put your feet up, a fixer-upper is not for you. On the other hand, do you not mind the clutter that comes with long-term home improvements? Do you live for DIY shows? Do you want to craft a space that feels just like home to you, even if it may take a few years? If so, then a fixer-upper may be for you.