Scenarios Where It Pays to Buy a Fixer-Upper -

It’s every home buyer’s worst nightmare: Locating a house within striking distance – of your budget and work- that quickly becomes a money pit. On the flip side of the fixer-upper experience is someone like Jordan Brannon, a director of digital strategy in Spanaway, WA, near Tacoma. Although he’s sunk considerable money into his two-story, late-1990s home, he feels it turned out being a wise investment.

Scenarios Where It Pays to Buy a Fixer-Upper

“It was about finding a home that we could add value to – and could purchase at a below-market rate,” he says of his 3,000-square-foot home. But there was one crucial caveat: “The fixer-upper work that we wanted to do, we had to be able to do.”

While that fixer-upper you’ve got your eye on may not be the steal you’re expecting – the average fixer-upper lists for just 8 % lower than market value, as outlined by a new analysis from Zillow Digs – it’s still a tempting prospect for a lot of buyers.

Should you make a fixer-upper your next home? Listed here are three scenarios where the answer could possibly be “Yes!”

When the upgrades are pretty straight forward

If you know hiring contractors was out of the question – to some extent because Brannon works at home – Brannon and his wife focused entirely on locating a home they could revamp themselves.

This meant forgoing homes with any foundation, electrical, or plumbing issues, and eyeing properties where cosmetic upgrades were the name of the game.

This isn’t to say the couple didn’t put in a great deal of hard work; the project took nearly 90 days.

“We basically gutted the first floor down to drywall – did a full repaint, with all new trim; replaced the kitchen cabinets and counter tops, and added new light fixtures and door handles,” Brannon says. New toilets and sinks are recent installments.

“The home looks 10 years younger, and feels cleaner and brighter,” Brannon remarks. “We’re more comfortable living in it, and I’m confident we’ve made an improvement in the home’s resale value.”

Combined estimates from contractors put the valuation of the improvements around $55,000, minus one bathroom. Altogether, Brannon says the couple spent about $15,000 on the work, plus 240 hours in labor (yes, he’s been tracking). For Brannon, it was a rewarding endeavor.

When the numbers add up

“Fixer uppers [only] make sense as long as the numbers pencil out,” says George Vanderploeg, a luxury real estate broker with Douglas Elliman in New York. To put it differently, “Is the money that I have to put into it going to make the property worth at least that much when I do it?”

In general, people will price a home based upon what others sell for, Vanderploeg explains. “If I were just to pick a block in Manhattan, say on 63rd Street, between Lexington and Third Avenue, the renovated townhouses there might sell for $3,000 per square foot,” he continues. “An un-renovated townhouse might sell for maybe $2,000 per square foot. If you have the money to put in, it may all work out.”

Of course, for many home buyers, especially those without a big – or any- renovations budget, this is easier said than done.

When the timing is right

Every municipality incorporates a building code, says Vanderploeg, and the work that you do on the home must fall within legal bounds. “An architect usually will supervise the work, and then at the end of the process, they’ll sign off on it,” he says. However, this can be time-consuming.

You can also encounter hurdles if your contractor falls behind schedule, has trouble staying on budget, or perhaps is just unreliable. “Where people go wrong sometimes is having a bad contractor,” says Vanderploeg.

If you’re unable to live in the home or get stuck waiting for permits, you could also inevitably be in a bind. “Sometimes we have to find people a place to live for six months to a year while they’re waiting for something to be finished,” Vanderploeg adds.

For these reasons alone, homeowners need to be clear-eyed about the renovation process.

Remember, committing to upgrade a fixer-upper is more than a labor of love – it takes a time and financial commitment. But if you’re ready to go all in, think about the bragging rights! Nick & Cindy Davis have assisted hundreds of clients in purchasing their fixer-upper as well as their dream home here in the Tampa Bay Area. We are always just a click here or call to 813-300-7116 away.

Take a look at a few of the most recent homes that came on the market here in the Tampa Area.

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3806 N Lake Drive #24, Tampa, FL

3806 N Lake Drive #24
Tampa, FL

$159,999
- Lot Size
  
  1,307 sqft
- Home Size
  
  1,077 sqft
- Beds
  
  2 Beds
- Baths
  
  2 Baths
- Year Built
  
  1973
- Days on Market
  
  1
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