So, you’re thinking about buying a house? Maybe you’re looking for a blank canvas to make your own, maybe you’re on a tight budget or maybe you just like the idea of renovating! Anytime is a good time to buy a fixer-upper, as they’re usually worth a little less than everything else around it. However, what happens after the purchase can be a nightmare or a profitable whopper of a deal. The secret to successfully renovating lies in getting appropriate inspections done, learning how to evaluate the repairs, and choosing the right property in the first place.
The Ideal Fixer-Upper
The ideal fixer-upper is the home that everybody will want in the future, but one that few want right now. Most homebuyers demand a home in pristine condition, the perfect property that’s ready for immediate occupancy. The crazy thing is that many imperfections that turn people off— such as peeling paint or dated fixtures—are easily fixed. Yet because they’re tough to see past initially, a home suffering from them often struggles on the rental market.
Location and Layout
Not all fixer-uppers have potential to be great. Whether an ugly duckling can turn into a swan depends on several factors.
The first is LOCATION! Don’t buy a fixer-upper on a busy intersection, on a main road, next to a school, or across the street from an entrance to a landfill—in other words, the sort of undesirable locale that sinks even houses in tip-top shape. Look out for the fixers in desirable or up-and-coming neighbourhoods. Examine the surrounding homes and how they are maintained. Do they look well-cared-for and mostly owner-occupied? That’s what you want!
Next, focus on the home’s configuration – or layout. The best fixer-upper is one that will appeal to the largest pool of buyers: at least a three-bedroom with more than one bath. Of course, a two-bedroom home can be profitable, especially if that’s the dominant size of homes in the neighbourhood (Such as the CBD), but a three-bedroom house is usually better.
The layout should flow – open plan is great. If the home is chopped up with a difficult layout, understand now that it can be expensive and impractical to move walls. The layout of the home needs to reflect the type of buyer your suburb will attract – such as bedrooms on the opposite side of the house, or where the master is upstairs and the rest of the rooms are downstairs, may not suit a young family. This may be better suited to families with older children – you need to think about your future target when renovating.
Evaluating the Condition
Obviously, the fixer-upper’s probably going to be in tricky condition, but some issues are worse than others. You need to separate the cosmetic problems from more fundamental ones.
More expensive fixes include:
– Replacing or adding air conditioning
Inspections for Fixer-Upper Homes
In any real estate transaction, you should always get a home inspection by a credentialed inspector before signing a contract – or at least put in the contract ‘subject to our approval of ___ inspections’. There are many types of inspections that you may want to review before buying a fixer-upper, such as:
- Roof certifications: If the seller hasn’t already provided evidence as to the age and condition of the roof, obtaining a roof certification at the seller’s expense is good business practice.
- Pest inspections: This is a must. Not every suburb has pest issues, but if your area deals with damage from termites, or ants, or even if you’re unsure, ask for an inspection. Also, make your purchase offer contingent on your approval of the inspection.
- Building inspections: This inspection report contains a description of the property and the materials used in the construction of the building. The purpose of a building inspection is to warn you about any significant damage to the building and issues that need to be fixed by a professional.
Not all fixer-uppers require equal fixing—and what needs to be fixed is somewhat subjective. A major rehab for one buyer is a walk in the park for another. Consider your expertise, your finances, your style (some may be more expensive), what you envision and to what extent you want to tackle a home that requires serious renovation!