Those home buyers that love properties that need lots of tender loving care and have the time, money, emotional and physical makeup to take on such a project have the potential for instantaneous equity and the pleasure that they participated in the home makeover. If you don’t have all four of these attributes, then a fixer-upper is probably not for you. Buying these type of properties can be fraught with peril. So before you make that leap, make sure you have a sensible idea in what to expect. Most of these type of homes are in older neighborhoods where many properties have already been updated.
Most fixer uppers are being sold in “as is” condition and should be throughly inspected by competent inspectors. The known repairs are obvious, it’s the unknown that these inspections can uncover. Do the math and figure out what you should pay to buy a fixer. Add up the cost to renovate, include labor and materials in your calculations. Then add another ten percent to the equation for any extras or unforseen problems that could arise. Be leery of any property that requires any major overhauls such as structural deficiencies or plumbing/electrical systems that have little effect on raising the value of the property.
There are improvements that can give back more than dollar for dollar value. Using Homes in Davis, California as an example. Adding legitimate usable square footage can cost about $200 a square foot. After completing that addition, the value could be worth $250 a square foot or more. Weigh the cost to value ratio for that neighborhood before adding more space. If your home is one of the largest homes already, it does not make sense to increase the size. Only add the space if you can recoup the value in the future. If your handy with the tools, a lot of minor improvements like resurfacing cabinets or painting can minimize the overall cost.
If you’re hiring others to make improvements, take the time to interview at least three licensed contractors and get bids. remember this is a marathon not a sprint. The time spent upfront can save you money in the long run. Buying a fixer-upper is not for the faint hearted, but the end results could be pleasurable and profitable. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs, join my professional networks at Twitter and LinkedIn and easy access to view local area homes for sale in Davis, California and the surrounding communities.