If you’re a big fan of home improvement shows or someone who’s looking for a good deal on a house, a fixer upper is an attractive option. It’s one way to get your hands on a house that otherwise is out of your price range. It also gives you an opportunity to customize the house and turn it into the home of your dreams.
This is especially true if you’re willing to invest sweat equity and do some of the work yourself. It looks easy enough, and—truth be told—the thought of living in a place that you built with your own two hands is kind of romantic. You can watch a few videos on Youtube to learn some basic construction techniques and ask questions on an online forum if you get into trouble.
Before you sign on that dotted line and start tearing down drywall, make sure this is the right decision for you. When you buy a house that needs major repairs, you’re taking a risk that will either help or hurt your bottom line. Let’s take a look at five questions you should ask before buying a fixer upper as your next home.
Is it worth it?
A house is more than a place to live with your family. It’s also an investment. In fact, it’s the most significant investment many people make during their lifetimes. Ideally, your house builds equity over time. You can borrow against this or sell the property for a profit.
On the surface, buying and renovating a fixer upper looks like a great way to boost equity in the house. After all, you should get the property at a discounted price, especially if the house needs some serious work. You also save money by doing the repair work yourself. However, you have to really crunch the numbers—including the amount of sweat equity you’re investing—to decide if the project is worth it.
Can you afford the renovation?
On TV, cash home buyers and flippers make it look so easy. They walk into the auction with a cashier’s check or have an investor working with them. You may not have that much cash lying around and if you haven’t successfully renovated a fixer upper before, it may be difficult to bring a private investor on board.
A home renovation project can easily get out of control, especially if you discover hidden damage along the way. Imagine, for example, that you notice signs of rot when removing a window. Not only do you have to find the source of the damage, but you also have to fix it. Then you need to replace the damaged walls and insulation, which can eat up your budget and extend your project timeline.
Even if you’re completing the renovation work on your own, you may come across a problem that’s better left to the professionals. It’s one thing to replace the electrical outlet covers inside the house or hang cabinets on the kitchen wall. It’s another to replace a breaker box or move a load bearing wall. Some of these jobs just are safe for you to do without training, and some require a permit from your local city or county. Make sure you have some cushion built into the budget so you can pay for this work.
Do you have the time?
Using sweat equity is a great way to save money, but it also requires a time commitment. Unless you’re taking a leave of absence from your day job, you’re left with evenings and weekends to work on the house. It will most likely take longer to renovate the house by yourself. This means you may go for weeks or months at a time without being able to use certain rooms. Depending on the extent of the project, you may not be able to live in the house at all until it’s done.
Think about where you and your family will sleep and eat and play. In some cases, you may be able to section off part of the house so you can live there while you work. If the new house is close enough to your current house—and you didn’t already sell it—you can stay until you complete the work in the new place. Just keep in mind that dividing your time between two residences can slow down your progress and may stretch your budget if you’re covering the costs of two homes.
Do you have the right skills?
Take a serious inventory of your skills before you commit yourself to a renovation project. If you’ve never used power tools before, you may not feel comfortable with a saw buzzing in your hands. Likewise, if you’re afraid of heights or have poor balance, it may not be a good idea to try replacing a roof on your own. You may also find it difficult to remove moldy walls and floors if you have a sensitive stomach.
On the other hand, tackling these tasks on your own is a great way to learn basic construction and home maintenance skills. When you’re done, you’ll have an intimate understanding of how the plumbing and electrical systems work. This may make it easier for you to deal with future surprises like a busted pipe in the middle of the night. It also boosts your confidence in your abilities, so you’ll be willing to do upgrades around the house at a later date.
Is it your dream house?
In the end, this may be the most important question of all. The opportunity to live in the house of your dreams can be worth the risk. If you plan to live there for an extended period of time, you’ll likely see the property’s value increase enough to balance everything you invested in it. Not only will you have the satisfaction of living in a place where you feel comfortable, but you also feel the pride of knowing you created that space.
Ultimately the decision of should you buy a fixer upper as your next home is up to you. You will need to decide if it’s the right move for you and your family.