So are in the market for a fixer-upper? If you are in the market to buy a home, the idea might have crossed your mind to pick a home up for a drastically reduced rate that needs updating and repair. Typically short sale and foreclosed homes fall within this category. When people are being foreclosed on, or are forced into a short sale, they are already bankrupt at that point, so they typically destroy the house. They always seem to have large dogs that they will let run the house to destroy it. They will put holes in the wall and they will absolutely trash the place up. I’ve seen plenty of homes like this and the people that lived in them.
At one time the “fixer-upper” fad seemed like a great thing to do, but my recommendation is to avoid it. Unless you don’t have a day job, then I’d avoid a situation where you are looking for a fixer-upper to gain instant equity. The reason I say this, is I’ve been through it twice myself. You would think that I would have learned my lesson the first time, but I let my imagination and enthusiasm get the best of me the second time. Basically, when you buy a fixer-upper, what ends up happening is that it will take 10 times longer than what you anticipated to remodel the home. Although the circumstances might be easier for the small box sized homes, anything larger will always require more time and work than what meets the eye while looking the home over. There are always unexpected problems that come about while making repairs and upgrades. If you plan on hiring a lot of the work out, it is very hard to find laborers with good skills that will do a good job. And it is an absolute hassle to make calls and get whatever dopes you can find to come over and paint or lay flooring or do whatever work you need. In the end, you will have put out a lot more cash towards the remodel than anticipated, which then makes the entire fiasco a waste of time.
There are only two types of people that I would recommend buying foreclosures and fixer-uppers: 1. Those that belong to an investment group that have the expertise and connections to make a good buy, the capital and connections to perform the upgrades, and a realtor to make the sale. Or…2. A person with no day job that absolutely enjoys working on homes and can’t get enough of it.
If you do not fall within those two categories, stay the heck away from any home that the seller has not upgraded or at least perfectly maintained over the years. About 90% of people that live in homes, just live in them. They’ll live in a home 8-15 years without so much as lifting a paint brush, and then they want full price for their home. Don’t give these people any breaks. If you buy a house that looks outdated and unkept, it will become an absolute nightmare. There are people out there who have had good experiences who might have picked a home up for a good price, updated it, and then sold a good price. But chances are, it will end up being one large headache. I wouldn’t deal with risk in this realm.
So when you are out there house hunting, take your time. If you don’t find a house that is in great condition, then don’t buy. Keep on renting or living wherever you are until you find a home that is in great shape. If anything, try looking for a house that is 5 years or less old if you can. Although the craftmanship isn’t the best on new homes, at least the insulating materials are modern, the water and plumbing pipes are new, the AC and furnaces is fairly new, and the foundation should be in good condition. Overall, my advice is to stay away from the fixer-upper biz and look for something that you can live in without having to spend all of your time and money fixing things. It isn’t worth the hassle. If you do happen to be shopping in an area where there are nothing but old fixer-uppers, and you don’t have a choice, then try to get a rock bottom price for it, take out an equity loan, and then look for a company with a project manager than can handle every single detail for you and have it completed within a matter of months. It will cost you, but if you make the right deal, then the overall cost should be right where the market value of the home is at.