Buying a fixer upper can be a very exciting idea for many of today’s consumers. Home improvement television shows, magazines, and blogs make the prospect look like fun and a great way to end up with a beautiful property. Social media sites such as Pinterest, Instagram, and Houzz are filled with seemingly endless images to help home buyers imagine what their home could look like.
Of course buying a home and renovating it is far from the only choice available. Buyers could decide to purchase a move in ready home, either one that already has all the features they desire, or one that requires them to sacrifice a bit on their wish list. Another option is to purchase a new construction home, either a custom build, spec, or tract home.
Which is the best decision? This will vary by the client and their scenario, but here are a few questions to think through when weighing the options.
What is available in the ideal location?
Where a home is located is an extremely important factor. Perhaps the most desired location is in a specific school district, neighborhood, near easy access to public transportation, a specified distance from a noisy highway, or with a view of the water, city lights, mountains, or other feature. In sought after areas there may be few homes to choose from, and the competition can be great when properties do come on the market.
If a home is available and the price is right, it can be an excellent move to purchase it, and renovate so that the property meets the needs of the new owners. It may be much easier to install hardwood floors and update the kitchen, than to wait, hoping a listing they love everything about will come on the market.
How much control do the buyers want over the design of their new home?
Some homeowners love the idea of hand picking every detail of their home’s décor, from cabinet finishes and wall colors, to outlet placement and bathroom hardware. Others don’t have the time to devote to the process, get overwhelmed by the choices, don’t have strong opinions, or don’t trust their own design skills.
There are renovation options to suit each style. Someone who wants to be heavily involved in creating their dream home may prefer to buy a home that needs a great deal of work and perform a large scale renovation. This might include removing walls to open up a closed floor plan, adding a master bathroom, or building an outdoor kitchen.
A buyer who prefers not to take on such a large project could still make a new home his or her own through smaller updates that can be completed quickly and still make a big impact. Examples include interior paint, new flooring, or an upgraded front door. There are even renovation loan options created specifically for financing small scale projects without large budgets, such as the FHA Limited 203(k) Rehabilitation Mortgage.
How much can be saved buying a home that needs work?
In addition to being a place to live, to call home, to raise families, and gather with friends, a house is also often the largest investment a buyer will make. The cost is an important factor, as is how the property is expected to appreciate.
It is often possible to purchase a distressed property and renovate the home making the needed updates and repairs for less than the cost of a move in ready home. This can provide the homeowners with instant equity, allowing them to realize a gain in property value at the completion of the improvements, rather than having to wait a long time to see the home’s worth rise.
A full suite of renovation mortgage loans makes it simple to finance both the cost of a new home and the work completed.
Photography by [Artazum] © Shutterstock.com
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Tags: home renovation
