In the past, I (Dawn) have talked here about buying a fixer-upper house. A great post yesterday by Lisa Aberle over at Get Rich Slowly, brought my own (continuing) experience with a fixer-upper home to mind again.

Lisa’s post “Should You Buy A Fixer-Upper?” is about her experiences with her own home. And much of her post mirrors my own experience. Buying a fixer-upper is certainly not for everyone, and even for those who can handle it, it’s incredibly easy to get bogged down by the project, physically, mentally, and financially.

Here are some of my favorite points that Lisa makes:

  •  “I believe even a carefully selected fixer-upper is really only a bargain if you can do the labor yourself. Even though we come from a long line of blue-collar workers, we have a lot to learn. Still, we have people to ask. Between our two families, we have two HVAC technicians, a plumber, an electrician, two ex-carpenters, a concrete worker, and two RNs (just in case the renovations don’t go smoothly).”

My Comment: This is incredibly important! The more you have to hire out to get the work done, the more expensive it’s going to be. If you aren’t handy, and none of your family or friends are handy, a fixer-upper is most likely not the best deal for you.

  •  “As much as possible, you need to know everything about the house. A home appraisal and a thorough home inspection should tell you what you need to know. What’s it worth? If it’s an old house (and most fixer uppers are), how is the foundation? How old is the plumbing and wiring? Is there evidence of mold or water damage? Does it need a new roof?”

My Comment: If the house isn’t structurally sound or needs major overhaul renovations, it’s probably not worth the cost of fixing it up. Even in great neighborhoods, chances are you’ll be spending too much through the cost of buying the house and fixing its major issues to ever get your money back on it. However, if you do feel it’s worth it, make sure you work the numbers on the cost of the renovation before committing to the house.

 And Lisa’s good rules of thumb for buying a fixer-upper

  • “Rule #1: Buy a fixer-upper at a cost (way) below the rest of the houses in a good neighborhood. By following this rule, your improvements will bring your house up to (or slightly exceed) the value of the surrounding properties. You won’t recoup your costs if your renovations result in “too much house” for the neighborhood.
  •  Rule #2. Find a fixer-upper with quality construction. That first house was cheap, costing less than our combined annual income at the time. But everything about it was cheap, including the materials used in its construction. And that led to a rodent infestation, among other things. (I think our record was catching 14 mice in a 24-hour period.)

 On the other hand, our second house has “good bones.” Maybe it needs lots of work, but at least the extra work will be built on a good foundation. Ah, but “lots of work” means mostly major, expensive projects.

  •  Rule #3. Pick a fixer-upper with cosmetic upgrades instead of major, expensive projects. Well, of course! We didn’t put lots of money into our first house. Instead of fixing the foundation or updating the kitchen, we did inexpensive things like painting, pulling out old, overgrown bushes, and replacing the carpet.”

Keeping Up Appearance

Another point I would make is that if you’re the type of person who likes to keep up appearances or impress people who visit, or even just drive by, a fixer-upper may not be a good choice. Unless you plan on hiring out the work and getting everything done all at once, you will be living in a state of flux while projects get worked on, especially if you are doing the work yourself in what free time you can string together. More than three years in, and my house is nowhere near being completely “fixed-up.”

And when we have anyone new over, I always feel compelled to say “We haven’t gotten around to the bathroom yet!” since our bathroom needs to be gutted, and with everything else that needed work, it’s just sat by the wayside. It’s functional, but looks truly awful. If you can’t bear the thought of a guest seeing your house like that, I would suggest looking elsewhere.

 

  • Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.
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