It’s hard to separate the gems from the duds when shopping for a new home. A lot of people will search for months, never quite finding that perfect match. Others will spend a little more time searching but not necessarily for the house but for the house they can make into their own – the perfect fixer-upper.
The Benefits of a Fixer-Upper
Buying a fixer-upper comes with a number of benefits. The most obvious is that you can spend the money you didn’t put into the actual sale into renovations and remodeling in order to make the home exactly what you want. There are other benefits, too, though. Sometimes going with a home that needs some work will allow you to buy a bigger home. You can also be a bit pickier about the neighborhood you buy into, whether you’re looking at a specific area or school district.
Another benefit is that the FHA 203k loan will allow you to roll the cost of your home and the finance cost for major repairs and renovations into one mortgage loan. This means you can still borrow the amount you need to get the job done and only have one loan payment to make each month.
Of course, whether you do that or not, the repairs you do make will almost immediately increase the equity you have in your home. Whether you leave in a few years or stay for the rest of your life, you’re guaranteed a great return on your investment.
What to Consider
You should make some careful considerations, of course. How much of the repair work can you realistically do on your own, keeping in mind that some DIY projects are a lot harder than home improvement shows make them look? Can you get estimates for the repairs you’ll need before you make a final offer on the home? Will the cost of permits put your projects over the top?
Does the home need structural work? This is often one of the biggest deal-breakers as structural repairs can cost a ton. Spending $500 or more on a structural engineer’s inspection before making a final offer could ultimately save you tens of thousands of dollars in headaches. If you do decide to buy, make sure the discount you’re getting for purchasing a fixer-upper reflects the costs you’re going to incur to make it livable.
Don’t only have a structural engineer visit, but a contractor who can do regular home inspections as well. Your offer should always be contingent on the results of a home inspection so you can get out of the offer if there is something major or otherwise undisclosed discovered.
A fixer-upper can be a major benefit, especially to a young couple starting out. You get to buy your dream home, a seller gets to move on without a hassle, and everyone is happy at the end of the day.