Before the recession, buying a run-down house, renovating it and ‘flipping’ it for a profit was an honest way to make a living. Now, buying a fixer-upper can be a great long-term investment for couples and families. In a nutshell, instead of purchasing a ready-to-move-in property, you buy a similar size for a lot less money, and then spend your pennies doing it up to your taste and style. It means you need less money for a deposit and mortgage which can be an appealing option for many, especially first-time buyers.
So, what do you need to consider when buying a fixer-upper?
- How much will it really cost?
If it costs more to improve the property than you’d make on the resale…is it really worth it? Before you invest you need to consider all of the costs involved. As well as the purchase price, you have additional costs to consider like LBTT and removal fees. Then you have the costs of refurbishing the home, from essential repairs, to decorating and furnishing. It can add up to a considerable amount of money
Take a good long look at the home report and get advice from those in the know. If possible, get quotes from tradespeople for any of the larger works that will be required so you can accurately budget for the improvements. On the other hand, if you have the skills to carry out much of the work yourself, or through trading work with others who can, you should factor in these savings. Can you move in straight away? If you need to live somewhere else, how long for and how much will that cost? Always try to overestimate how much it will all cost, as there will always be some things that you cannot anticipate or prepare for.
- How much time do you need to invest?
As well as considering how long it will take from getting the keys to moving in, you need to consider how much time you can invest in the project on a daily or weekly basis. You need to be honest and figure out how long the renovation will take based on how long you have to give to it – whether it’s from a purely project management standpoint, or including hands-on work time.
Be realistic and don’t schedule every free minute you have for doing DIY; remember that you need to factor in time for relaxing and living! The perfect family home is no use if you don’t get to spend time with your family.
- Is the location worth the work?
As Kirsty and Phil would say, buying properties is all about ‘location, location, location’. Do your research before you buy and see what other properties have sold for in the area. Look for price variance for properties in various states of repair if possible! And remember, the future value of your home is more likely to go up with or without fixing it up, if you buy in a good area that has a history of demand.
So, before you commit to buying a property that needs a lot of work, consider the pros and cons, speak to some experts and do your research; but overall a fixer-upper can be a hugely rewarding way of getting on, or moving up, the property ladder.