Fixer-upper buying process
What is a Fixer-Upper?
A fixer-upper is usually an older home that needs some work, anything from fresh paint and repairs to bigger renovations. Because of this, these properties often sell for less than market price, making them a great option for both homebuyers and investors who want to customize a home or build value over time.
Is a Fixer-Upper Right for Me?
Buying a fixer-upper home demands a significant time commitment for both first-time homebuyers and real estate investors. Every fixer-upper property is different, and there’s no perfect one. Unless you’re experienced with renovations and ready to handle the repairs and upgrades needed to build value.
Get a Home Inspection
A qualified home inspector provides a detailed report on the house so you have a general idea of the condition. Don't let cosmetic flaws deter you from a home you love because things like windows, paint, trim and fixtures can be easily fixed. Instead, focus on major components of a home like roofing, foundation, bathrooms, kitchen, electrical, and plumbing, to name a few, that might you might need to budget for.
Estimate Renovation Costs
To prevent costs form spiraling out of control, you need a home renovation budget. There are a lot of repair estimators out there, so ask your friends and co-workers if they've done repairs lately and could tell you how much they cost. There is no denying that a fixer-upper needs work, so DIY whenever possible which can save you a lot of money. After all, contractors can be pricey.
Find the Right Financing
There are many ways to finance a fixer-upper, including special mortgages, loans, or grants. Here are some examples of common programs that can help finance a renovation project.
- FHA 203(k) Rehabilitation Loan
- Fannie Mae HomeStyle Loan
-Freddie Mac CHOICEReno eXpress
- Freddie Mac CHOICERenovation Mortgages
- VA Loan
- USDA Renovation Loan (Rural Areas Only)
Benefits & Drawbacks
Benefits - Often priced lower, a chance to personalize the home
Drawbacks - Expensive renovation, Unexpected issues, Significant time investment
