Planning on Tackling a Fixer-Upper?
When you flip through the channels on your TV, you may notice the influx of home improvement shows popping up. No doubt home improvement shows are quite the rage on television these days, generating substantial audiences and fans on shows like Flip or Flop, The Property Brothers, and Fixer Upper. Following the house-hunters through their home purchase and watching them transform a once bleak home into a beautiful habitation makes for fun entertainment. As appealing and adventuresome as it may sound, fixer-uppers do, however, carry a degree of risk that can potentially turn an investment into a money pit. So, let’s examine both the pros and cons of buying a fixer-upper!
Finding homes can be tough in a crowded market because everyone is looking for a nice house. Rather than buy a project, most would prefer to buy a home that is move-in ready. Therefore, when you invest in a fixer-upper, you are met with less competition because most people simply do not want to do the work needed to bring a home up to par.
Because fixer-uppers allow you to buy a property for far less money, a fixer-upper can also help you achieve greater cash flow as the monthly mortgage payments are smaller. Fixer-uppers also provide a means to build immediate equity in the property through “forced appreciation.” While properties tend to gain value over time, a fixer-upper can shorten that time frame by raising its value faster through rehabilitating it to the standard of other homes in the area.
Fixer-upper homes can also be your blank canvas as far as your taste for design. Apply that open-concept to the kitchen, install new appliances, brush on that fresh coat of paint – it’s time for that magical transformation!
Any time you knock down a wall, rip up a floor covering, or remove part of the roof, you increase the risk of finding more that needs to be fixed. Hidden expenses arise as it is difficult to accurately determine the total cost of rehab on a fixer-upper home. It can reach the point to where costs eclipse the savings, so it’s important to research average remodeling costs and to hire home professionals to perform thorough inspections and appraisals.
Rehabbing a home is usually not as easy as it appears. From the first swing of the hammer to the final coat of paint, the experience can be quite stressful. If you plan to do the work yourself, expect a few cuts, bruises, and a lot of frustration. If you plan on hiring it out, anticipate dealing with contractors who say one thing and do another, show up late, and miss deadlines.
The time required to transform a fixer-upper can also be a hassle. All you need to do with a move-in ready home is unpack your boxes. When remodeling a fixer-upper, it may not be ready for months, so you might have to contend with an expiring lease, paying rent and a mortgage for a period, or seeking other temporary living arrangements.
Fixer-uppers can be a great financial option to take advantage of, but due diligence is required to ensure a smooth process and positive experience.
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