The Ultimate Guide to Buying a Fixer-Upper Home

The allure of a fixer-upper is hard to deny. Home makeover shows have shown us time and again how a run-down house can be transformed into a wonder of architectural or interior design, and there’s something romantic about breathing new life into an old and neglected home. Sometimes the price is right too—or seems to be.

But you have to take what you see on TV with a grain or two of salt. Revamping a run-down home isn’t just a matter of slapping on a new coat of paint. Sometimes there are expensive repairs involved, and you might find yourself quickly exceeding your budget, even if the upfront property cost was low.

That’s not to say you should always avoid a fixer-upper. Sometimes buying a home that needs repairs is a great financial decision. But you have to know what you’re getting into. This guide will help you with just that. Read on to learn how to get a fixer-upper home of your dreams. 

Assessing Your Readiness for a Fixer-Upper

A fixer-upper is certainly not for every homeowner. Most homebuyers are looking to move into a home that requires minimal updating. Even if you think you’re ready for significant home improvements, you might feel otherwise when the romantic idea becomes a reality.

So, first things first: determine if you’re up to the challenge. 

• Consider your budget. 

A fixer-upper sounds great on paper. You buy a cheap, somewhat beat-up property, invest in some strategic repairs, update the aesthetics, and suddenly your home is the envy of the neighborhood.

Well, it doesn’t always quite work out that way. Some old homes can turn into money pits as major structural issues are uncovered in the course of a renovation or remodel. Maybe you begin by knocking out some cabinets or a wall and discover a termite infestation. Or while building an addition, find cracks in the foundation. If issues like these were previously undisclosed or undiscovered, they might not have been included in the home price, so you’re not necessarily recouping your investment by repairing them. It’s not the same thing as, for example, upping the home’s value by adding a bedroom.

This is all to say that you should be prepared for the possibility of a significant financial investment when you’re purchasing a fixer-upper home. Don’t get too comfortable with the low purchase price. Maintain a substantial emergency fund to comfortably manage hidden costs and surprise repairs.

• Determine the extent of repairs you can take on personally. 

Part of the appeal of a fixer-upper is the opportunity to save money. That opportunity quickly fades away if you have to hire a professional for every task. 

Some tasks should absolutely be left to the pros, but assess what you might be capable of taking on yourself. Can you install carpeting? Put up drywall? Lay down tile? Strip flaking paint from siding? If you’re not confident in your ability to knock out some of these sorts of tasks on your own, a fixer-upper may not be a wise choice.

• Think about the timeline. 

Renovating and remodeling a home doesn’t happen overnight, particularly if you’re managing many of the construction tasks on your own. If you have a comfortable place to live and can afford to spend many months updating an old home, then a fixer-upper might be viable. Just don’t put yourself in a position where you’re racing against the clock. For example, if you’re already living in your fixer-upper home, you want to have your heating system in working order well ahead of the onset of cold temperatures in the fall.

As a final note, consider your risk tolerance. Old homes have plenty of surprises in store. Even if money were no object, you’ll need to be flexible and pivot when new developments arise. Maybe a structural support prevents you from moving forward with a particular design. Maybe you have to reroute that central air system you had planned. Maybe you can’t knock out that particular wall to have an open concept living area without sacrificing the structural integrity of the house. Any contractor has encountered thousands of such situations. If you’re the type of personality who gets dead set on a particular outcome and has a hard time adapting to a change of plans, maybe a fixer-upper isn’t for you.

How To Find Fixer-Upper Houses For Sale

Fixer-uppers aren’t necessarily hard to come by. You can find one much the same way you can find a home in good condition—consulting with local realtors and perusing online brokerages. There are a couple additional options to consider, however. Here’s how to buy a fixer-upper via less conventional means:

• Work with real estate wholesalers. Real estate wholesalers are effectively middlemen who pair investors or buyers with property owners. They commonly deal with distressed properties, so they can be great resources for buyers interested in fixer-uppers.
• Investigate foreclosures and short sales. Another option is to work with banks and mortgage lenders to find properties that are foreclosed or eligible for short sales. Sometimes the circumstances that lead to foreclosure also mean that a property is more likely to be distressed.
• Look into local auctions. Sometimes the government, a bank, company, or private seller puts up a property at auction. A local real estate auction can be a good way to get a fixer-upper at a reasonable price.

What to Look for When Buying a Fixer-Upper Home

The typical dos and don’ts of buying a home don’t necessarily apply to fixer-uppers. A distressed property, by its very nature, will require some serious repairs. But there are some repairs you might be less inclined to take on. Here are some tips on what to watch out for.

1. Be wary of major structural damage.

You probably don’t want to get involved with a property that has significant issues with the foundation, roof, or structural supports. These often require substantial financial inputs to resolve, and are just not worth the effort unless you bought the property at an exceptionally low price or have reason to expect that the property will appreciate due to its location.

2. Watch out for water damage, mold, and pests.

Environmental damage and pest infestations are other reasons to avoid a property. Water damage and mold are usually indicative of larger issues, such as a leaky roof or poor drainage. Even if the root cause is attended to, remedying the effects of water damage and mold and quickly put you out of budget. You may need to tear down interior walls and replace insulation and rotting supports before putting up fresh drywall, repainting, and so on. 

Certain pests, especially in bad infestations, can pose health concerns, so it’s not just a matter of evicting the mice or bats or bedbugs, but cleaning up what they have left behind. Again, that can mean replacing drywall, carpeting, insulation, floorboards, and more. And even if you don’t have a biohazard to deal with, there’s the possibility of structural damage, as in the case of a bad termite infestation.

3. Be wary of environmental problems.

It’s wise to stay clear of properties that could be contaminated or are in violation of environmental or health regulations. Interior issues can include asbestos, mold, radon, and lead paint, but the surrounding property could also be contaminated by oil and agricultural or industrial chemicals. This contamination could come from runoff from nearby factories, farms, or landfills, leaking underground storage tanks, or spills from prior activities on the property. Once environmental contamination is discovered, you could very well be on the hook for the cleanup—and that rarely comes cheap.

4. Try to avoid old and outdated electrical and plumbing systems. 

Sure, a fixer-upper requires some fixing, but updating major home systems, like plumbing and electrical, is a huge undertaking. If replacing these systems wasn’t factored into the property’s purchase price, the house just probably isn’t worth it.

Other Factors to Keep in Mind When Buying a Fixer-Upper

What else is important to keep in mind when you look to invest in a distressed property?

• Location. Consider not just the house but the surrounding location. If nearby homes are valued highly and the local housing market is on the upswing, a distressed property could be a great investment. On the other hand, you might not get much of a return on your investment if you update a home in an area that isn’t attracting buyers.
• Permits, codes, and laws. Keep local regulations in mind. If you take on any repairs yourself, ensure you build to code. Always make sure you have permission to make any updates. Historic homes, for example, might have restrictions on what can be remodeled or renovated.
• Property history. Do as much research as you can on the property’s history. When was the home built? How many times has it changed hands? Has it always been a residential property or was the area used for another purpose in the past? What have past inspections uncovered? Answers to these kinds of questions will help you make a more informed decision on whether to purchase a property.

The Importance of a Home Warranty Plan

If you buy a fixer-upper, ideally you aren’t replacing every appliance and system. Some parts of the home should be salvageable but of course are subject to malfunction years down the line. That’s where a home warranty comes in. While you’re preoccupied with updating your new home, you can rest assured that its intact systems and appliances are protected in the event of a breakdown or malfunction. 

Whether you’re a first-time buyer or experienced real estate investor, Liberty Home Guard has a plan to support your property. Use our website for a free quote or call (866)-983-0874.