Well, the answer is yes, but then it depends. You should definitively buy and upper-fixer. Sooner than later you will start to see the benefits. Also, in the long run, you will see how these help you increase the value of your property. This makes it all worth it as you then see it as a profitable investment and not a luxurious loss.
What Does Fixer-Upper Really Mean?
Let us begin by defining, or more like differentiating between a fixer-upper and a lost cause. A fixer-upper is a house whose structure is intact but needs mostly some cosmetic touches and a little repair here and there. Now, a house that is falling apart does not fit this definition.
If you are buying the second to the Monster’s House, then you definitively are in for a loss. This is why you should ask your realtor to be honest with you about what is the real condition of the house.
Once you have decided that the house only requires mostly esthetical repairs, you are in for a win. Most of the glam of a house is on the front porch or in the front face. In other words, you should work in the landscaping.
Nick, who specializes in landscape design in Vancouver says that it’s not hard to improve the landscaping of an old house, even if it has been neglected. It is all about making the right investments, sticking to the initial plan.
Pull out the Calculator
Now, this is the time in which you should do the math. It is quite easy and the equation is simple. Once you have made a thorough assessment of the house, you can make an estimate of the costs of renovation. This renovation costs should include materials and labor. Be tough on this one as you prefer costs to have a lowering tendency than the opposite. Based on tendencies in prices in your neighborhood, get the most likely cost of the house once renovated and subtract the above cost. Deduct some 5 or 10 percent for extras you might want to add, some mishaps, and inflation.
The value that is left is what you should pay for the house. Make sure that the agreement includes an inspection, which will give you peace of mind to feel sure that you are either making a good investment or that you should just back down.
It all Depends
Now, as we mentioned earlier, buying an upper-fixer will become a good investment if you consider some things. First, it is good if you input most of the labor. If your plan is to hire expensive laborers to do the work for you then maybe you might just as well buy a ready-to-inhabit house and save yourself the pain.
There are some things that you will probably not be able to fix, such as plumbing or electricity, but then you should crunch the numbers to make it all fit into your estimate and budget.
Will this even have you make money? This will depend on the area where you are buying, and this is pretty important. Some areas are better fixer-upper than others. Make sure you find a place that guarantees that properties have a positive capital gain.