Should I Buy a Fixer Upper for my First Home? (negotiating, price)
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1. An "hour" away from work is a huge mistake.
2. Location matters. Can change the house, but can't change location.
3. Find a contractor, take him to the house, and have him price out those repairs then add $5000 over that cost; a normal remodel always goes over budget, a fixer even more so!
4. Take a break from house hunting. You're becoming obsessed & that's when mistakes happen.
5. Save more, and up the budget if you're not handy.
6. Over time, owning a home costs a lot more than rent. The purchase price is only the beginning of never ending costs! Don't fall for the propaganda.
7. Have you checked insurance rates? Closing costs? Property Taxes? HOAs?
Seriously, take your time & asses everything!
This is a great summary and I think it's some great points for the OP.
I'd expand point #4. The point of wanting to buy so badly is certainly valid, but timing should also be based on the local real estate market. Real Estate prices don't turn on a dime, so if prices are rising...and interest rates, sooner may be better than later. Local conditions would dictate real estate pricing action.
Otherwise I think the OP has a couple of issues.
1. New Job - Great, but it's hard to project 5-6 years out
2. Unemployed Spouse - If something bad happens at the new job, these guys are out flat.
3. Fixer-Uppers are Cash Intensive - If I buy a $200K home with 20% down I need $40K up front. If I buy that same home for $160K with 20% down I need $32K up front + $25K to fix it up = $57K up front.
4. If a home has been run down, it may continue to break, especially if cheap materials were used in initial construction. When the home was new, was it nice? Can you see quality materials were used? Was extra time put in for builder flourishes or was it plain, big and functional. Poorly or cheaply built homes will continue to have more problems, which is an expensive own for a non-handy OP.
In conclusion, if OP were handy, this situation may make sense. If OP has cash but low income, this would make sense. Otherwise fixer uppers are best left to flippers. I'd opt for the tiny, well-built house in a location close to a decent school if you have a child and your work. Live below your means and look to rebuild savings once in for your next home. Much better than living far away and utilizing all of your means to cover must have repairs at the start.
You can save a lot of money by buying smaller. The 1100 square foot house? Why not? There's still just two of you, and you said this would be your first foray into house buying. You can do a lot to a house, but you can't put it somewhere else; so if the location is good, think hard about this one.
If it truly only needs cosmetic work (get a good house inspector, and not one that the realtor recommends, then you will know if darker problems lurk in there,) and if not, you can do the cosmetic work and make money when you sell the house.
Most posters on here have offered solid advice. I would not go into a big rehab job as my first house purchase. You will have things to do anyway, believe me!
A final note: this is the lull season for house sales. In the south, plenty of houses will come on sale in February, in the north, in March. You might want to wait. OR, if this house you like has been on the market for months, they may be open to a big price reduction.
We really wanted to go for it, but we are in a 1250 sqft home now with a full basement (unfinished but great for storing stuff) and it feels like the minimum we are comfortable in. At one point a few years ago we rented a 1600 sqft home with attached garage and that felt perfect. We are both homebodies and do a lot at home. Cooking, entertaining, relaxing, so the bigger home space is a big deal to us, more than most people. Anyway, I think we can make the 1100 work NOW, but one kid is on the way in 8 months, and we want to have 2 more after that. We also have two dogs, so we just seeing that home become a space problem REALLY quick. It's appealing in a lot of ways, easier maintenance, lower property taxes, lower utility costs, but we can't see ourselves there for more than two years. We're still open to it, but it's worrisome.
Quote:
Originally Posted by Silverfall
Have you thought about buying the smaller house that is ready to go with the intention to use it for rental income when you are ready to buy your forever home?
I have a 1960's home that we have gutted 3/4 of so far and I have lived in it for 13 years. I also have an office built in 1895 that I am in the process of restoring. All I can say is that if you don't like fixing things, don't buy a fixer. It is much harder than it seems on shows, and drywall is not easy to make look good. I gained a whole new respect for drywallers that can tape and texture them to look good.
If you do decide to go the fixer route see if you can find a local contractor to be a remodel coach. I know we have one here. He will walk you through step by step what you need to do for your project. He will show you how to cut tile, lay flooring, etc. One of the worst things homeowners can do is devalue their property by doing home de-provement jobs. I can't tell you how many homes I walked in that said "updated" and the buyer and I are just thinking of all the gutting that has to be done.
The smaller home could definitely make a good rental, but I'm not very keen on the whole renting thing. At least not right now. I've known too many landlords and their tales of horrible tenants, or at worst, tenants wrecking the homes completely.
With a baby on the way in eight months, there is no time to dilly dally. But since babies love being right next to you, in reality you have about three years until you really need the extra space.
If you are on a tight budget and need a 1600+ sq. ft. home in a decent neighborhood, you are looking at a fixer-upper. Period.
Save your money like crazy. Make a game of it. Get that 20% down payment organized.
Take those home buying classes that are offered for those applying for the programs for first time homebuyers. Whether you qualify or not, you will learn a ton of useful information.
Volunteer at Habitat for Humanity. See what a difference having a journeyman on the job makes.
Hire such people as you go along.
For example, I would never DIY drywall. Not in a million years. Those who do it for a living make it look easy. It is not. Even painting has it challenges, but I'm willing to take that on. We've built fences and decks, installed flooring, changed out ceiling fans. Beyond that, we hire those who do it for a living.
Start by finding a journeyman contractor and take it from there.
We really wanted to go for it, but we are in a 1250 sqft home now with a full basement (unfinished but great for storing stuff) and it feels like the minimum we are comfortable in. At one point a few years ago we rented a 1600 sqft home with attached garage and that felt perfect. We are both homebodies and do a lot at home. Cooking, entertaining, relaxing, so the bigger home space is a big deal to us, more than most people. Anyway, I think we can make the 1100 work NOW, but one kid is on the way in 8 months, and we want to have 2 more after that. We also have two dogs, so we just seeing that home become a space problem REALLY quick. It's appealing in a lot of ways, easier maintenance, lower property taxes, lower utility costs, but we can't see ourselves there for more than two years. We're still open to it, but it's worrisome.
If you Google "average home size in the 1950's", you will find:
Quote:
According to the National Association of Home Builders, the average size of a new single-family American residence in 1950 was 983 square feet. That's *average* - - a first time home was probably smaller.
If you can't afford a much larger home that doesn't need much fixing, then maybe you need to consider moonlighting? Back in the days when mortage interest could be 15%-20% or more, it was not at all uncommon for buyers in some areas to work two jobs instead of one because those mortgage payments were steep. Of course, moonlighting would mean little to no time with the baby for you.
It's time for some tough choices.
My ex and I, and our baby, and our pets, started out with a 948 square foot three bedroom home back in those days. We felt so lucky to be able to afford a nice home like that; we were very happy there and did not feel even slightly crowded. For us, that was our choice. YMMV and apparently does.
OP, dear young grasshopper, I think you are underestimating what is involved in a fixer.
I've been through three BIG, I mean gutted big, renos, one "cosmetic" re-do and one turnkey purchase (but I still painted, replaced doors etc).
I can PROMISE you, you do not want to get into a place at your skill level/budget that needs more than cosmetics.
How old is the place you're considering?
If it's new enough not to have old knob and tube wiring (do you know what that is?) and pipes made of modern material, that'd at least take away the concern you may have to rewire the whole place/replace old cast iron pipes. Labor intensive and COSTLY to hire done.
Does it have drywall or plaster? I concur with above posters who say they would never do their own drywall. VERY hard to get to look "just right" for an amateur.
If it's pre-1950 or so I'd advise against it as the likelihood of it needing more than cosmetics is great.
If you're talking about a post 1970s house with just ugly outdated interior, that could be OK and even fun to make it beautiful but if you get into electrical, plumbing, HVAC (NOT cheap), roof, subfloor and drywall issues I'd say save that for your next purchase after this one when you have more $$ to work with.
If you Google "average home size in the 1950's", you will find:
If you can't afford a much larger home that doesn't need much fixing, then maybe you need to consider moonlighting? Back in the days when mortage interest could be 15%-20% or more, it was not at all uncommon for buyers in some areas to work two jobs instead of one because those mortgage payments were steep. Of course, moonlighting would mean little to no time with the baby for you.
It's time for some tough choices.
My ex and I, and our baby, and our pets, started out with a 948 square foot three bedroom home back in those days. We felt so lucky to be able to afford a nice home like that; we were very happy there and did not feel even slightly crowded. For us, that was our choice. YMMV and apparently does.
A lot of people we know keep saying to go for the smaller homes, but like I said, we are much more homebodies then them and I just know we would struggle to be comfortable in the space. We have home gym equipment, two dogs, kids on the way, big on cooking, big on having friends over, like having offices to work from home (we both freelance sometimes and work on personal projects quite actively). To some people a 1600sqft home is gigantic for a first home, but for us it's the perfect size. We honestly really don't want bigger than that though. We looked at some 1800-2000 sqft fixer uppers in our budget and right away we both said it was way too big for us right now. We are being realistic with our needs in that 1400-1600 sqft range.
Quote:
Originally Posted by OverItAll
OP, dear young grasshopper, I think you are underestimating what is involved in a fixer.
I've been through three BIG, I mean gutted big, renos, one "cosmetic" re-do and one turnkey purchase (but I still painted, replaced doors etc).
I can PROMISE you, you do not want to get into a place at your skill level/budget that needs more than cosmetics.
How old is the place you're considering?
If it's new enough not to have old knob and tube wiring (do you know what that is?) and pipes made of modern material, that'd at least take away the concern you may have to rewire the whole place/replace old cast iron pipes. Labor intensive and COSTLY to hire done.
Does it have drywall or plaster? I concur with above posters who say they would never do their own drywall. VERY hard to get to look "just right" for an amateur.
If it's pre-1950 or so I'd advise against it as the likelihood of it needing more than cosmetics is great.
If you're talking about a post 1970s house with just ugly outdated interior, that could be OK and even fun to make it beautiful but if you get into electrical, plumbing, HVAC (NOT cheap), roof, subfloor and drywall issues I'd say save that for your next purchase after this one when you have more $$ to work with.
I keep hearing a lot of people saying the costs are going to go through the roof if we pursue a fixer upper, but I'm not too sure about that, at least for my definition of fixer upper. When I use the word fixer upper in the context of this thread, I'm talking strictly cosmetic, but major projects like redoing the bathroom, putting all new floors down, changing every switch and adding new lighting, painting inside and out, etc. If anything in these "fixer uppers" were actually structural issues, we would turn away. I definitely agree unforeseen things can pop up, but that's why we would have a thorough home inspection first to allow us to back out in case of any structural issues or major issues, which I wholly agree is something we are going to avoid.
That being said, I can actually provide a fairly extensive list for what the home we're considering will need. The seller has said everything is working great and no structural issues, and has agreed to provide a home warranty, but he is selling it "as is". We've viewed the house three times and here is what it needs from looking:
Immediate:
- Rip up most floors (900-1000 sqft) 3 rooms are laminate and ok to stay.
- Paint 2-3 rooms. One ceiling the paint has cracked so may or may not be an issue. Honestly this doesn't REALLY need to be done but we figure it would be more convenient to paint while the floor is ripped up.
- Install new floors. ~700sqft carpet ~300sqft hardwood.
- Get a VERY thorough deep clean. (the home was very dirty and had a pet odor)
- Potentially get duct cleaning if new floors and deep clean doesn't get rid of pet odor
- Replace upstairs bathroom shower head and toilet.
- Install half of privacy fence for backyard
Later whenever convenient:
- New dishwasher
- new switches and ceiling lights
- new doors for entrances and exits
- Redo downstairs half bath (new toilet, sink, flooring, and tile)
- Replace toilet upstairs
- Front deck needs clean and stain
- Home outside needs to be pressure washed
- Home outside trim needs to be painted and some parts repaired/replaced.
- Some gutters need to be be replaced.
- Backyard needs to be regraded because of standing water, would like to plant 1-2 trees after as well to help with this even more.
- Yard needs major clean and small bush removal. (easy, just time consuming)
And that's about all I can see from looking at it, but yea, more stuff can come up and who knows what the home inspection will reveal. But really I estimate the immediate stuff costing about 10k or less which we can do right now. The other stuff is really stuff that doesn't need to be done right away in my opinion.
My wife and I have wanted to buy a home for years but never did because we kept relocating for work and what not. Now we are more settled, but unfortunately the cost of homes in this area are higher than expected. However, rent prices in the area are also atrociously high, so after countless financial analysis, its cheaper every time to try to buy something in our budget than keep renting.
In short, We have a 135k budget in an area where the decent starter home goes for 200k. We've been looking at listings for over a year so we have a pretty good idea of the market, and have been actively looking with a realtor over the past month. There are not many homes in our price range, and I'm being pretty flexible looking within up to an hour drive from my workplace. One of our target towns I think only has 15 listings in the price range, and they are either way too small (under 1000 sqft), or pretty much a huge rehab project. I've been looking obsessively at new listings daily, but it's usually only a trickle on 1 or 2 per day (in that huge hour radius mind you) and they follow the same pattern of being too small or a complete wreck.
I've never been much of a handyman, and I was more keen on finding a turn key home, but it's simply not happening at our price range and I'm afraid if we wait till the summer, we may still not find anything turn key that works for us. That being said, I'm been coming around to the idea of buying one of these fixer uppers, but I'm afraid I may be getting into a situation that's going to be one I'm struggling to keep my head above water in.
I guess my main questions... Would it be silly to buy a fixer upper without really any handyman/contractor background? There is one home in particular that is a great size and location, but in need of serious cosmetic work, moderate landscaping, and minor updating. We are considering buying the home because we feel we can make it really great and we love the space, but I'm afraid of getting into a situation I'm not ready for. I would want to try to learn how to do some of the work myself to save money, but of course we would hire contractors as well. What are some good resources to learn about fixing up homes and making basic repairs and updates around the house?
EDIT: We were planning on financing by utilizing a new line of credit, and estimate we would want to put at least 10k or repairs/updates into the home over the year. However, it only needs the floors replaced, rooms painted, and a thorough deep clean initially to be livable, and we can do the other repairs over time.
First, see about the plumming and electrical as if it isn't good it will cost a LOT. If that passes, then it could be a very good option for you.
Hire someone to do the cleaning, a professional setup and you'll get a good start. Painting isn't complicated either and can give you an amazing new look. It's the easiest and cheapest you can do. Depending on the floor, you might have that done. But if this is all that makes it liveable, its really not much. If the price and the square footage is good, then this might be a good idea. Make a list of ALL repairs/additions you want and get an estamate in case you need help.
You can't create more space, or put it in an area where its more desirable, so if that's the core problem, think hard about it. Paint, cosmetic additions, and such are entirely doable. Consider any upgrade in terms of can I fix it.
Given the limited supply in your price range, it may be the best option you have to make what you want. Even the almost perfect is going to have things you want to change, so if they start out like you want your ahead of things.
My house was mid abandoned renovation, and cheap because of it, and one of the really cool things is I've been able to do a lot without having to undo other things.
And don't rush yourself. Your not running a race, but perfecting you ideas and home.
A lot of people we know keep saying to go for the smaller homes, but like I said, we are much more homebodies then them and I just know we would struggle to be comfortable in the space. We have home gym equipment, two dogs, kids on the way, big on cooking, big on having friends over, like having offices to work from home (we both freelance sometimes and work on personal projects quite actively). To some people a 1600sqft home is gigantic for a first home, but for us it's the perfect size.
Well, unless I misunderstood what you said, you don't have enough income to afford a house that size that isn't a fixer-upper, in the area you require, so maybe you are just out of luck and will need to cut back to a more modest lifestyle that matches your income. I hope not.
And no, you are not "more homebodies then them". You just are spending more money than them - - apparently (from what you said) without enough income to support it.
A lot of people we know keep saying to go for the smaller homes, but like I said, we are much more homebodies then them and I just know we would struggle to be comfortable in the space. We have home gym equipment, two dogs, kids on the way, big on cooking, big on having friends over, like having offices to work from home (we both freelance sometimes and work on personal projects quite actively). To some people a 1600sqft home is gigantic for a first home, but for us it's the perfect size. We honestly really don't want bigger than that though. We looked at some 1800-2000 sqft fixer uppers in our budget and right away we both said it was way too big for us right now. We are being realistic with our needs in that 1400-1600 sqft range.
I keep hearing a lot of people saying the costs are going to go through the roof if we pursue a fixer upper, but I'm not too sure about that, at least for my definition of fixer upper. When I use the word fixer upper in the context of this thread, I'm talking strictly cosmetic, but major projects like redoing the bathroom, putting all new floors down, changing every switch and adding new lighting, painting inside and out, etc. If anything in these "fixer uppers" were actually structural issues, we would turn away. I definitely agree unforeseen things can pop up, but that's why we would have a thorough home inspection first to allow us to back out in case of any structural issues or major issues, which I wholly agree is something we are going to avoid.
That being said, I can actually provide a fairly extensive list for what the home we're considering will need. The seller has said everything is working great and no structural issues, and has agreed to provide a home warranty, but he is selling it "as is". We've viewed the house three times and here is what it needs from looking:
Immediate:
- Rip up most floors (900-1000 sqft) 3 rooms are laminate and ok to stay.
- Paint 2-3 rooms. One ceiling the paint has cracked so may or may not be an issue. Honestly this doesn't REALLY need to be done but we figure it would be more convenient to paint while the floor is ripped up.
- Install new floors. ~700sqft carpet ~300sqft hardwood.
- Get a VERY thorough deep clean. (the home was very dirty and had a pet odor)
- Potentially get duct cleaning if new floors and deep clean doesn't get rid of pet odor
- Replace upstairs bathroom shower head and toilet.
- Install half of privacy fence for backyard
Later whenever convenient:
- New dishwasher
- new switches and ceiling lights
- new doors for entrances and exits
- Redo downstairs half bath (new toilet, sink, flooring, and tile)
- Replace toilet upstairs
- Front deck needs clean and stain
- Home outside needs to be pressure washed
- Home outside trim needs to be painted and some parts repaired/replaced.
- Some gutters need to be be replaced.
- Backyard needs to be regraded because of standing water, would like to plant 1-2 trees after as well to help with this even more.
- Yard needs major clean and small bush removal. (easy, just time consuming)
And that's about all I can see from looking at it, but yea, more stuff can come up and who knows what the home inspection will reveal. But really I estimate the immediate stuff costing about 10k or less which we can do right now. The other stuff is really stuff that doesn't need to be done right away in my opinion.
Except for the pet odors, what you are describing are cosmetic updates.
Pet odors can be difficult to eliminate. There are threads on the C-D House forum that address this. Sealing subfloors helps, but sometimes the subfloors need to be ripped up and replaced to eliminate the odor.
I'm going out on a limb here and imagining the seller is older with pets that aren't totally house trained. Nothing has been cleaned or fixed in years. The seller's assurances that everything works great and there are no structural issues needs to be taken with a grain of salt as the seller may simply be unaware of issues.
I would urge you to go through this house with a contractor as well as an inspector.
What year was it built?
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