There’s something to be said for potential and vision, but when it comes to buying a fixer-upper to call home, moving from dream to reality can be complicated. Is it worth it?
It makes sense “if you’re handy and find a home in a very desirable neighborhood for a less expensive price,” says Frank Sanchez, co-founder of SDF Capital in Mamaroneck. “If the home just needs cosmetic improvements, they will cost much less than what they will return on market value.”
But that said, it can be a dicey choice.
- Have plenty of cash: Buy a fixer-upper only if you have cash to cover the down payment, make budgeted repairs and cover additional unexpected repairs. “Ask yourself, ‘If this goes horribly wrong, will I still be able to recover financially and live the life I’m accustomed to?’ ” If not, don’t do it, says Greg Allen of Express Homebuyers in Springfield, Virginia.
- Do a cost vs. benefit analysis: “Value should be one of the first considerations. If the renovations aren’t expected to raise the property value, it might not make sense,” says Allen Shayanfekr, CEO and co-founder of Sharestates, a Great Neck real estate investment firm.
Remodeling Magazine’s annual cost vs. value survey is a good resource to help determine what you might expect from your investment (nwsdy.li/fixup). It’s also a good idea to look at comps of similar homes in good condition.
Kristina McCann, a broker associate at Alain Pinel Realtors in Orinda, California, adds, “I don’t recommend buying a fixer-upper, unless it is your dream home in your dream location.”