Shawn DeLaat
If you have been thinking about buying a home, then you are aware of the many different decisions and considerations that go into every step of the process. Before you even start looking for a home you need to determine your budget, your list of wants and needs, where you’d like to live, and more.
Another big decision you need to make when looking for a home is whether or not you want a renovated, move-in ready property or if you’re willing to invest in a home that needs some work, commonly referred to as a fixer-upper.
With a renovated, move-in-ready home you do not have to worry about making any type of changes or improvements before you start unpacking your belongings. However, all of your design choices, finishes and other cosmetic decisions are made for you by the previous homeowners.
With a fixer-upper, you have free range to customize your space entirely. Depending on the house’s condition, you can either move in right away and live in the house while you renovate, or you can complete the renovations and repairs before moving in.
The term “fixer-upper” is a blanket term used to describe a house that needs updating, repairs, renovations or other improvements to make it a turnkey or move-in-ready home. The reason we say it is a blanket term is that some fixer-uppers just need fresh paint, updated floors, new hardware and other small jobs to bring it up to date, while other homes, sometimes referred to as rehab homes, may need complete redesigns, large structural repairs and have other serious issues such as electrical or plumbing.
Whatever the degree of fixer-upper the house may be, listed below are some important factors to consider before purchasing.
What Are Your Skills?
One of the most lucrative approaches to a fixer-upper home is to take on as many of the redesign, repair and renovation projects as you can for yourself. This not only saves you extensive amounts of money but gives you the freedom to work at your own pace and ensure everything is done to your standards. However, just because you can visualize the finished product, doesn’t mean you have what it takes to make it a reality. It is important to take into consideration the true extent of your abilities.
If the fixer-upper you are looking at requires purely cosmetic updates and you have experience with design, drywall repair, measuring, painting, laying flooring, and other handy small jobs, it’s likely the perfect opportunity for you. In a case like this, you only need to consider the cost of materials and your own time. A cosmetic overhaul is considered the ideal fixer-upper, especially if you can renovate it yourself. These projects often lead to the highest return on your investment as they require the shortest amount of time and money.
If you have no experience with these types of jobs or do not feel comfortable doing them yourself, it is important to factor in both material costs and the cost of having these jobs done professionally. These costs can add up quickly when hiring professionals but can sometimes still add more value than the total cost of renovation. An experienced real estate professional can help you determine what renovations would add significant value to your property.
If you are thinking about buying a house that requires extensive repairs including structural, plumbing or electrical work, it is important to consider the associated costs. Depending on the size and seriousness of these jobs, it can be a losing battle. Furthermore, most people do not have a comprehensive understanding of these skilled trades. These jobs are better left to professionals as they can jeopardize the integrity and safety of your home if done incorrectly. For rehab-type fixer-uppers, it truly comes down to the opinions of the trusted professionals around you such as your real estate agent, contractor, home inspectors, etc.
In order to best determine the true condition of a home, it is always recommended to bring in a licensed home inspector prior to purchase. It is a small and smart investment that gives you insight into the home and its current/potential issues. This gives you an idea of the repairs needed around the home and helps you plan a budget accordingly. Learn more about the value of a home inspection.
How Much Time Do You Have?
Whether you are a single person who wants to renovate and flip the home, or you have a family and you want to renovate the home to suit your needs, it is important to consider your project timeline. This includes not just the total amount of time from purchase to completion but also your time invested.
If you are capable of completing a lot of the work yourself, you have to take a look at your schedule with a realistic eye. If you have a full-time job and decide to buy a fixer-upper home, you are essentially committing to a second job. Oftentimes you will lose evenings, weekends and your other spare time to your renovation projects until they are complete. Do you have the time to commit to and complete these renovations?
If you are taking the route of hiring professionals to renovate and update your home, you have to consider the time it takes for them to schedule you in and complete the job.
No matter what direction you take, you should always account for some delays in your schedule. Whether it is back-ordered materials, unexpected issues, sick days, or any other unanticipated delay.
Let’s Talk Money
Fixer-uppers are typically listed below market value, making them a great opportunity to save money and grow your investment quickly.
When it comes to analyzing if the fixer-upper is worth your time, you have to take into consideration the purchase price of the home, expected costs of renovation including materials, labour, permits, etc, and the expected future value of your home after the renovations. Do not forget to leave extra money in the budget for unexpected costs that may arise during the process.
While it is important to make smart budgeting decisions and save money where possible to maximize your investment, remember that buying high-quality, reliable products will make a world of difference. They will not only look better, but they will last longer.
Depending on the condition of your fixer-upper and the skills that you have, you can ask a contractor to come in and provide an estimate of what it would cost to repair and renovate the home to your desired outcome prior to making an offer. This can help you plan a budget and determine if the renovations will add enough value to justify the cost of making them.
Ultimately, you can have professional opinions, make a plan and project a budget but there are often unforeseen issues and expenses that will arise. Your financial bottom line is unpredictable and never guaranteed with a fixer-upper. However, if it has a positive outcome, the financial reward can be handsome.
The Final Decision
Deciding whether or not to purchase a fixer-upper home can be difficult, on top of considering all these things, it is important to talk to your real estate agent and ask for advice. They are experts in the local market and can give you valuable insights about desirable neighbourhoods, current market values and projected market values after renovations. They are also experts in determining which renovations and features add the most value to a home in their specific market and which ones to avoid. Your local real estate professional is one of the best tools you can use when deciding whether you should buy a fixer-upper or a fully renovated home.
If you do decide to purchase a fixer-upper, you can be handsomely rewarded both emotionally and/or financially when your project is completed. If you have renovated the home to live in, you get a completely customized home that was designed by you and has your and your family’s needs in mind and you have also increased the value for a future sale. If you have renovated the home to flip and stayed within your budget and timeline, you can often make the home worth far more than your initial investment.
Looking To Buy A House In The Niagara Region?
If you are looking to buy a home, call Davids & DeLaat today. Whether you are looking for a fixer-upper in Niagara Region or a fully renovated home, we have got you covered! We are experts in the local Niagara real estate market and we know how to navigate the market and find the perfect home for you and your real estate goals. Check out the available listings in Niagara today and reach out to learn more. If you do not see what you’re looking for, give us a call so we can find you what you’re looking for!
