Pros and Cons of Buying a Fixer Upper in California
For people who want to buy a home in California, you often are dealing with high real estate prices. This is why some homebuyers like to buy an under market value fixer upper and renovate it. While this can be a smart financial move in some cases, it also can cause plenty of heartache. Go over this list of pros and cons of buying a California fixer upper before you make the move:
Pro #1 – Lots of Upside
Fixing up the kitchen or bathroom can add tens of thousands of dollars to the value of your home, especially if you bought it well under market value. Upgrading a kitchen or bath tend to be some of the best improvements you can make in a home in terms of adding to the home's value. If you do not buy top of the line granite, tile and appliances, this can be a very smart move.
Con #1 – Going Over budget
One of the biggest problems of doing renovations in a fixer upper is that you will spend more than you should. This is especially tempting when you are fixing up your own home. After all, there always is another level of quality or expense you can add to any home renovation project. We all like nice things, so spending above the budget is easy to do. Also, if you are not experienced with rehabs, you may underestimate what something will cost. Further, an inspector could find a problem that leads to more problems. Your $25,000 rehab could suddenly cost $50,000 or more.
Pro #2 – Have It Your Way
Putting your own personal touch on things is what makes your home your home. With a fixer upper, you can decide most of how the home is going to be decorated and look. You can pick your own paint, flooring, finishes, appliances and more.
Con #2 – You Can Get Stuck with the House
Sometimes people run out of money. They lose their job or some major expense crops up and they are not able to finish the house. Then what are you going to do with it? If the market goes down, you may have trouble selling a house that is incomplete. Some experts recommend not buying a fixer upper if you do not plan to stay there for at least five years.
Pro #3 – Getting Your Dream Home Cheap
A fixer upper in a nice area can get you a very good deal at a low price. If you buy a fixer upper for $300,000 and put $75k into it and your home is now worth over $400,000, this is a good deal.
Con #3 – Divorce
A fixer upper as your personal residence can bring you and your partner together. And it tears others apart. Fixing up a house on your own is a very stressful process both physically, financially and emotionally. Many of those renovations can take weeks or months to complete and that is hard to do with the other stresses of life.
Pro #4 – Quality Control
You have the say over how the house is going to look and function. You choose the materials and the contractors, or you do it yourself. So you know that the job is being done right.
Con #4 – Renovation Zone
Some people call drywall dust 'divorce dust' and that is not far wrong in some cases. Living in a house with a non-functioning kitchen or bathroom can be stressful. Some people end up running low on funds and then they are living in a half-complete home for an extended period of time, which is stressful for everyone.
Pro #5 – Discounted Prices
Homes that need work are usually priced accordingly, even in places with a high cost of living and high real estate prices. Buying a fixer upper can make a lot of sense if you are a strong negotiator and do not overpay.
Con #5 – Finding a Good Team
Related to quality control is that it is always hard to find a good, affordable contracting team that you can trust. Reputable builders often are booked for months in advance. Are your ready to live in a fixer upper until they are ready to start on your project?
Whether buying a fixer upper in California is a good idea or not depends upon the price you pay for it, what you are doing to it, how much money you have, and how well the project is managed. Many people start out a fixer upper with the best of intentions, but costs add up and surprises surface, and the $50,000 renovation suddenly costs $150,000 or more. This can make the renovation difficult to complete. So, be advised to get very good advice from your real estate team and your contractors about the California fixer upper you are considering. They will give you a realistic idea if your fixer upper purchase will be a dream, or nightmare.- Written by James Swift