If you want to buy a property on a budget or if you’re looking for a project you can get stuck into, a fixer-upper property could be perfect for you.
Not sure what a fixer-upper property is or how to find one? We’ve put together this comprehensive guide to getting started.
What is a Fixer-Upper Home?
Often spotted on television shows like ‘Fixer-Upper’, ‘Property Brothers’ and ‘Restored by the Fords’,fixer-upper homes are properties that need extensive repairs carried out.
These repairs can vary depending on the property. Some need new curtains and carpets, while others have to be structurally rebuilt!
A fixer-upper can be a great way to get a home with lots of potential at a low cost. Alternatively, they can help you on your way if you want to build up a portfolio of homes or get into house flipping.
Of course, the reality of fixing up properties is not the same as a 30-minute TV show. If you’ve ever deliberated getting into the fixer-upper game, read on to see what you need to be aware of.
Advantages of Fixer-Upper Homes
People go to significant lengths to find the right fixer-upper property. And looking at the advantages, we can see why!
● Fully customize your new property how you like: A fixer-upper is the perfect opportunity to put your own personal stamp on your home
● Get more for your money: A fixer-upper is ideal for people who are on a smaller budget that are looking to get onto the property ladder, and you can often get a bigger property for less money
● They’re great for investment:You can adapt the property to take advantage of current trends, leading to a fast and lucrative sale
● You can take advantage of tax incentives: Many home improvements are tax deductible, meaning you can claim them on your tax return
Disadvantages of Fixer-Upper Homes
While we love a good fixer-upper, they’re not for everyone. While some people might love the thrill of seeing a project through from start to finish; others don’t want the hassle.
● Managing a fixer-upper project can be stressful: There are people to keep an eye on, budgets to track and neighbors to placate!
● It’s hard work: The work takes a lot of time, especially if you’re doing most of the renovations yourself. Expect a lot of living out of boxes and staying in motels
● Costs can often exceed initial budgets: Fixer-upper projects generally don’t run smoothly. You have to expect the unexpected and can often spend more time and money than you originally earmarked
What Makes a Great Fixer-Upper Home?
While price is important when it comes to finding an amazing fixer-upper home, it’s essential to consider other factors too.
Location, Location, Location
Location is key.
Is your dream property close to schools, public transport, hospitals, or other amenities? Whether you plan to live in the property or sell it on, you need to consider proximity to key services, as well as the general vibe of the neighborhood.
High Potential Resale Value
It’s also important to consider resale potential. When you look at the price you paid for the property and the money you spent to renovate it, will you make a profit when you’re ready to move on?
You can often find historical sale prices online for other nearby properties, which is a good indicator of the potential ceiling-price of the property you’re looking at.
ConvenientLayout of the Rooms
Whilst you can always change the layout of your property, some changes come with significant costs. Bathroom and kitchen moves can be very expensive, and may require you to live elsewhere until the work is completed.
The layout of a home is something that can impact the resale value too – so buying a fixer-upper home with a convenient layout should be a priority..
Whereto Find Fixer-Upper Homes
Not sure where to find a fixer-upper home? The good news is that there are lots of different places to start your search!
Website databases (like Flyhomes)
Many people list their homes on websites as it’s quick, convenient, and affordable. That means if you’re a buyer, there are hundreds of listings to check out.
We have thousands of homes for sale on the Flyhomes website, in over 100 locations across the US.Why not take our Home Match quiz to identify the perfect property for you?
Agencies
If you’re not internet savvy or prefer the personal touch when looking for the fixer-upper home of your dreams, a realtor can help you out.
A real estate agent will find homes that meet your specific requirements and meet with you to show you around. If you’re lucky, a realtor will even tip you off about properties you might like before they hit the market, so it always pays to keep your estate agent sweet!
Search The MLS
The MLS, or Multiple Listing Service, can be a great way to find out about fixer-upper properties for sale.
It’s a database managed by real estate brokers, which they use to share data about properties for sale. It’s a way for realtors to help each other connect people with the right homes before they goon the market.
If a property on the MLS is listed as a short sale or is ‘real estate owned’ (REO), it’s potentially a fixer-upper!
The downside of the MLS? You need a real estate license to use it, or must be given access through your realtor.
Auction
They may feel slightly scary to navigate if you’re new to them, but auctions are fantastic ways to find fixer-upper homes at a good price.
As most properties go to auction because of death or foreclosure, it’s highly likely that these homes need a lot of TLC.
Tax Sales
Properties become tax-defaulted if taxes remain unpaid after a set period of time, typically five years.
When this happens, the county tax collector will sell the property. This usually happens through a public auction. As most of these properties will be in a state of neglect, a tax-defaulted property isa fantastic option if you want an affordable fixer-upper home.
It’s essential to do your research, as some of the properties on offer aren’t worth the money. However, many of the houses are sold for up to 80% less than the current market value.
Bank and Lender Websites
As well as website databases and the MLS, another place you can find fixer-upper homes are bank and lender websites.
Many banks and lenders list foreclosed properties they own. After all; it’s in their best interests to sell them on as quickly as possible!
Take a look and see if your bank or lender of choice has a website section called ‘bank-owned homes’.
Tax Records
This method needs a lot of research and investigation, but if you’re willing to put the time in, you can snap up a great property with minimal competition.
You can get a list of tax-delinquent properties at your local tax assessor’s office, and use this information to see who is struggling to pay their taxes. They may be willing to sell up to pay their tax bill and downgrade to something more affordable.
The Department of Agriculture (USDA)
Dreaming of a fixer-upper property in the heart of a sleepy rural town? If so, the Department of Agriculture (USDA) might be able to help.
The USDA website lists homes, farms, and ranches that have defaulted on their taxes, meaning you can get a fixer-upper at up to 40% less than market cost.
The U.S. Department of Housing and Urban Development (HUD)
The HUD website lists a range of properties that have defaulted on their FHA government mortgages.You can view the homes online, and if you see something you like the look of, contact a HUD-approved real estate broker that can submit an offer for you.
Many of these homes are in good neighborhoods, making them great if you’re looking for a fixer-upper with lots of local amenities.
And if in doubt… ask around!
Some of the best fixer-upper properties aren’t on the market or haven’t been advertised yet.
Hop in the car and keep an eye out for any homes looking for a brand-new owner.
Why not ‘drive for dollars’? This is when you drive around a neighborhood looking for homes that need a bit of attention. Boarded-up windows, piles of newspapers, and yards with unkempt lawns are all signs that a property could be a potential fixer-upper.
Alternatively, if you know you want to live in a particular area, why not pick the brains of the residents? You can print out flyers saying you’re interested in moving and ask people to get in touch if they have any leads. You might even find someone willing to sell directly to you to avoid the extra paperwork!
Financing Options with Fixer Upper Loans Combination Mortgages
While fixer-upper properties sell for less than their ready-to-move-in counterparts, there are still renovations and home improvements that need paying for. In this scenario, a combination mortgage may be the solution.
A combination mortgage (or loan) provides the money for renovations, and a conventional mortgage when the work is done. It means you can save time having to find two separate lenders and as both loans close at the same time, you can save on closing costs too.
Not all mortgage lenders offer combination loans, so be sure to ask your lender of choice if this is an option.
Here are some of the other options for financing you may see available:
FHA203(k) streamlined
This loan is similar to theFHA 203(k) standard loan, but is intended for simpler projects under $35,0000.There are less restrictions in place than the standard loan.
FannieMae HomeStyle
This loan is popular with resellers as it allows them to refinance their existing mortgage to get the money for improvements. It’s very flexible but can take a while before the loan is approved.
Personal loan
If you don’t want to borrow from your mortgage provider, you can go to your bank or online lender for the money. This type of loan is unsecured so you don’t have to use your property as collateral, but interest rates are generally higher.
Tips and Tricks When Buying a Fixer Upper Home
So you’ve considered all the pros and cons and come to the conclusion that a fixer-upper home is right for your needs. That’s awesome news!
The next question… What do you need to look out for when finding the right property? After all, not all fixer-upper homes are created equal.
Here are some tips for getting a property with limitless potential.
Tip 1: Choose properties that have great potential that is unseen by most home buyers
Many homebuyers look for a property that they can envision themselves moving into straight away without having to make changes. For example, 12% of people say they would be put off by a home with outdated décor or carpets.
You can use this to your advantage when searching for your perfect fixer-upper home. Look for the properties that have untapped potential and will become fantastic homes with just a few simple fixes.
Here are ten remodeling projects with the best return on investment
Tip 2: Look for properties that have easy-to-adjust layouts
Some properties have issues that are nigh-on impossible to fix. For example, if you want a garden that gets the sun, there’s not a lot you will be able to do with a north-facing house.
However, some homes have layouts that you can optimize with just a few simple changes. For example, if there’s a wall between the kitchen and dining room, can you knock it down to create a light and airy open-plan space? Can you repurpose a small bedroom into a storage space or a walk-in closet?
While some people love a challenge when it comes to renovating their new property, it’s perfectly okay to play it safe with some quick wins too!
Tip 3: Plan for the future
It always pays to think two steps ahead when buying a home. Do your research and see if your prospective new neighbors, HOA, and council have any future development work planned.
For example: there may be an old parking garage in the street that’s a bit of an eyesore. After doing your research, you have found the local council has recently agreed to have it demolished and is going to replace it with a new public park. It makes sense to buy your property before the works are completed.
You don’t have to spend money getting rid of the garage yourself, and you can take advantage of the benefits of a brand-new open space; win-win!
Remember that we provide a wealth of information about your prospective new property, from what work has been done in the local area to the risk of floods and earthquakes.
Tip 4: Save money by doing some of the work yourself
It can be very easy to underestimate the amount of money you need to invest in a fixer-upper. It’s estimated that two out of five people overspend on their renovation projects by an average of 20%.
The greatest expense in any fixer-upper project? Labor costs.
You can save a substantial amount of money by doing some of the work yourself. While we always recommend using qualified contractors for specialist work like electrics and plumbing, doing the gardening and painting yourself are good ways to save cash.
Not sure where to begin? Your local community college may offer some short courses to get you started!
What to consider before you make an offer
You’ve found the perfect fixer-upper, and it’s time to sign on the dotted line. However, before you do that, there are a few things to think about.
Understand the difference between cosmetic and structural work
The work you need to do to rejuvenate your new home can be split into two different types – cosmetic and structural.
Cosmetic fixer-upper issues
Cosmetic work is the work you do to make the house nicer and are things you can generally do yourself. It includes:
● Painting and decorating
● Landscaping
● Cleaning
● Replacing light fixtures
● Updating appliances and furniture
● Installing new carpets or laminate flooring
Structural fixer-upper issues
Structural work is work you must do to make the house safe to live in and are things you are likely to need the support of a contractor, engineer, or architect for. It includes:
● Electrical work
● Plumbing
● Roofing
● Heating and cooling
● Foundation work
● Structural support
Structural work is generally more expensive, but needs to be carried out quickly for health and safety reasons. Assess how much of each type of work is required and prioritize accordingly. If the plumbing is dangerous, you might have to make do with that avocado bathroom suite for a little longer than you planned.
Seta renovation budget (and stick to it!)
You might be tempted to consider a fixer-upper in order to save money. However, it’s important to understand that you can quickly burn through your renovation budget if you don’t have a handle on your finances.
It’s essential to set a budget and ensure you have a realistic idea of the total cost, as well as a contingency pot if something doesn’t go to plan. For example, let’s say you start ripping out the kitchen fittings only to find that extensive structural work is needed.
As well as the typical costs like labor, equipment, and materials, think about:
● Living costs – will you need to stay somewhere else while the work takes place?
● Permit fees – you may need a building permit for projects like demolishing a load-bearing wall, expanding the property, or installing an air conditioner. Different cities and counties have different requirements, so always best to double-check in advance
● The general fees for buying the home. For example, agency fees and down payments
Not quite ready to commit? Remember that Flyhomes offers a rent-to-own option. We buy the home you want, you pay rent, and after your lease ends, you can buy the home outright or walk away.
How to know if a fixer-upper is a teardown
While many fixer-uppers become beautiful homes with a bit of hard work, some properties are better when they’re demolished.These homes are called tear downs.
You might want to buy a property solely to demolish it. For example, if the land is worth more than the value of the home, or you want to build a more modern house in its place.
Some properties are sold as ‘condemned’,meaning they are unfit to live in. In this situation, the easiest thing to do with a condemned house is to knock it down and start over.
The problem comes when you buy a fixer-upper property with the intention of renovating it, only to find it’s not worth the time and money.
Knowing the amount of structural work that needs to be done and carrying out a thorough home inspection will help. We’ll talk about home inspections in more detail later.
Remember, if you do buy a teardown, you need to factor in demolition, permit, and clean-up costs. It can cost up to $25,000 to knock down a home!
Who to contact for support
Buying a property is a big commitment, and you should never undertake it alone. If you’re considering purchasing a fixer-upper, here are the people who can help you take stock of what needs to be done.
Home Inspector
A home inspector will be your new best friend when it comes to identifying how much work your property needs.
This qualified professional will assess the interior and exterior of the home you’re planning to buy, and let you know what issues they find. You then have the choice of whether you want to continue with the purchase or not.
According to Porch, 86% of home inspections find something that must be fixed, with the roof, electricals, and windows being the main culprits.
The cost for a home inspector typically lies with the buyer. If you’re not sure who to use, your realtor will be able to suggest a few names or, alternatively, ask friends and family for recommendations.
Architect or Engineer
If you think (or know) there are structural issues with your new home, an architect or engineer will be able to check things out for you and advise on a plan of action.
Let’s say you live in an earthquake zone. An engineer will assess your property and make recommendations to keep you safe, like reinforcing walls, using anchor bolts to secure the walls to the foundation, and installing metal ties to the roof.
Contractor
While a home inspector, architect or engineer will help you see what needs to be done and make recommendations, they typically won’t be involved in the work. That’s when your friendly neighborhood contractor comes in.
Read online reviews, ask friends and family who they’ve used in the past, and most importantly… get at least three quotes before you choose a contractor to work with!
Conclusion:Is a Fixer-Upper Worth the Extra Work?
A fixer-upper can be a great way to get the home you’ve always wanted at a rock-bottom price.
However, it’s not the right choice for everyone. You need to be willing to put the work in and be prepared if things don’t go to plan. It’s essential to do your research and know what you need to do before you invest.
If you do decide to go ahead and purchase one, you’ll find it’s all worth it when you finish the work and can relax in your newly refurbished home!
Looking for some inspiration to get you started? Check out the fixer-uppers we have for sale in various states:
Fixer-upper homes in California
Fixer-upper homes in District of Columbia
Fixer-upper homes in Massachusetts
Fixer-upper homes in North Carolina
Fixer-upper homes in New Mexico
Fixer-upper homes in Pennsylvania
Fixer-upper homes in South Carolina
Fixer-upper homes in Tennessee
Fixer-upper homes in Washington
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