As with any decision you might make for a large expenditure of money, it is time to begin making assessments of how much you want to spend; which begins with a good lender who can advise you about qualifying and financing available for the home as well as the improvements; the area where you want to purchase; which begins with a good Realtor ® who can educate you about the services, resale values and possible homeowners associations in the area, and finally whether or not a “fixer” is the most economical and financially feasible way to go.
The decision to purchase a fixer, which may or may not be owned by a bank, should not be entered into lightly. There are many factors that should be explored fully before jumping in on what could become a bidding war for an attractively priced property. One of the major considerations is whether or not you have the ability to do the work yourself or if you must hire a contractor. The “handyperson” will certainly save themselves money by cleaning, painting, repairing, installing, patching or repairing drywall, landscaping, decorating, remodeling and other such things required of the “fixer”, but the real question is; If you are blessed with that ability how much time will it involve and how much time do you have to dedicate to the job. Depending on your spare time, your work schedule and your pay at your current job you may find the task overwhelming, too lengthy of a process or just not economical in the event you can earn more than you would pay someone else to do the work. I have seen many families with the best of intentions live in turmoil and disarray for what might be up to years while they complete a remodel project. This can cause excessive stress to relationships even in the strongest of families. So be sure you analyze your work schedule, your spare money (never forgetting that even contractors often add at least a 15% contingency to estimated costs), your family demands and your ability to earn at your present job. The last item to consider is whether or not you can live in the home during the renovation. If you have to continue to pay rent where you currently live as well as your house payment on the new property you need to calculate the additional expense of two residences, including utilities. These are all items that need to be considered.
On the flip side, there are a number of homes that are available that require minimal or no work. These homes are typically priced at the high end of the market but often when you compare the cost, time, headaches and unexpected contingencies of the “fixer” you may find the higher price is actually more cost effective.
In closing, when looking at a fixer you must take into consideration, time constraints for the work load plus time away from your family, ability to perform the tasks yourself, the cost of materials plus a contingency fee of 15%, any additional cost if you should run into unexpected circumstances, cost of living expenses during renovation and your emotional well being. If these costs are less than the higher price you would pay for the home that is “move in ready” then jump in with both feet and don’t look back. If they are greater in cost than the higher priced home then shop diligently, assess the competition and purchase the home of your dreams!
Happy House Hunting and Sweet American Dreams!
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