Fixer-Uppers
If the idea of rolling up your sleeves and working on your home after you move in excites you, a fixer-upper may be your answer to homeownership. You can often find a house in need of repairs in a good location. A fixer-upper will cost less than a similar house in good shape would cost, and you'll have control over the quality and look of the repairs and updates made to your house.
Be realistic when looking at fixer-uppers. Know how much repair work you can actually take on and complete once the initial wave of rehabbing enthusiasm passes.
Additionally, avoid houses in which major repairs are needed. Stay away from houses with serious defects in the foundation or working systems (such as heating, electrical, or plumbing) or in which a major reshuffling of rooms is necessary to create a workable traffic pattern. All of this work is expensive, and you may not see much of your financial investment returned when you sell. A buyer will expect workable plumbing and heating, adequate wiring, and so on. Even adding a new roof comes under the heading of a major repair, though this can add to value because it improves the appearance of the home.
If you have the ability to build a house yourself or if you have family engaged in one phase or another of the construction trades, these cautionary words might not apply. Broadly speaking, however, truly run-down houses — houses that are little more than shells — are just too far gone for the novice homebuyer who is merely a little clever and handy.
There are two exceptions to these caveats. One is the professional renovator who buys a tumbledown house, renovates it, and sells it for a profit. The other is the fixer-upper enthusiast who buys a distressed property in a new restoration area, where there are dilapidated houses that with enough care (and funds) can eventually be worth a lot of money.
A novice should stick to houses that need painting, landscaping, minor-to medium-size repairs, carpeting, and other cosmetic improvements. Upgrading the kitchen and bathroom(s) can also be profitable when it comes to resale, and so will adding a second bathroom. The house should look untended and slightly shabby, not like a bombed-out shell.
There are a number of things to keep in mind while shopping for the least expensive yet potentially most salvageable and profitable fixer-upper. Prices for shabby properties might be almost as high as prices for houses in better condition. It is important not to overpay for any house, but it is particularly important for you not to spend all of your money on a house that will need still more money — and big bucks at that — to make it look good.
Location
Remember location, of course. A run-down house in a solid or even a pretty darned attractive neighborhood can be a good investment. Alas, too many of those dwellings are in equally run-down blocks, where no amount of renovating will increase their value.
Creative Solutions
If the fixer-upper you are considering has been on the market for a long time, ask yourself why. Location aside, it might be that it needs a lot of work, but there could be other reasons. Suppose the house is very dark and dreary inside. That defect could be remedied by installing a skylight or two, an idea that might not have occurred to other house shoppers. Be creative as you go through these homes. Knowing how to fix flaws to a basically sound property that might put off other buyers could bring you an excellent deal. (Be sure, too, that the seller is not asking too much for the house.)
Estimate Repairs
As you walk through fixer-uppers, make notes on repairs needed, remembering that a house inspector will do a more thorough job later. Then take out your calculator when you return home and figure roughly how much you will need to spend in upgrading costs. If you cannot estimate costs to fix some malfunction or other, at least list the problem, with a repair figure to be filled in later. Seeing a sizable list of wrongs could well change your mind about buying a particular property.
Use your own judgment in determining how much fixing up you can undertake, both emotionally and financially. And be realistic; if you've never worked with plumbing before, you are probably not going to be able to replace an entire house's plumbing system.
Speaking of work, consider who will do the repairs in the house you buy. It is most cost-effective if the owners do most of the work themselves — labor costs are high. In the ideal situation, the pros are called only for highly specialized areas such as electrical work, heating, some plumbing, and the like. You should be willing to do as much as possible of the other jobs, with a little guidance from the folks at the local home-improvement center.
Zoning Restrictions
Look into local zoning restrictions when you find a house that interests you. Be sure you can renovate the way you want, particularly if you are interested in adding an extension or second floor to the house. Perhaps you will not be permitted to do so, or perhaps you will require a variance. Are you sure you can win one? Do you want to go to that trouble?
Your Living Quarters
Is the renovation work going to be so drastic or so messy that you will be unable to live in the house until most of the work is complete? If so, where will you live? Can you afford to carry a mortgage payment and pay the rent on the place where you are now, perhaps along with a home-repair loan payment each month?
If you feel you can — or must — live there while work is in progress, try to settle in for the long haul by organizing yourself. Be certain your family, or your marriage, can stand the strain of the always-present odor of sawdust and paint, the constant walking around of ladders and planks of wood, and the sense that life at home is always going to be messy, dirty, and incomplete.
How much time are you going to be able to devote to a renovation project with your work schedule? Do you travel in your job? Do you put in ten-hour days at the office? Is your spouse equally busy in a demanding career?
Are you single, with no one to share the rehab burden? Consider all of this in determining just how grand a rehab project you can undertake. If you think, “Well, I'll work on the house weekends,” you may be surprised at how soon you will begin to tire of that weekend agenda.
Always have a fixer-upper — or any house, really — inspected by a professional before you commit to it. See Chapter 14 for more on inspections.
Buying a house in a designated historic district brings special concerns. You could be restricted from making the types of changes you envision to the property that interests you. Exterior alterations will, in all likelihood, have to be approved by a local commission. Exterior surfacing and paint colors will probably be regulated. However, you will be allowed to do anything you want inside the house.
Learn all you can about the district that interests you before you make an offer on any property inside its boundaries. Homes in these enclaves usually retain their value and cachet because of the uniform appearance of the neighborhoods. Still, some house hunters do not like the restrictions or curbs on their own artistic expressions.
