Buying your first home can be very exciting. Among all the decisions you'll have to make when you seek that home is whether you want to buy one that's ready to move into and live in as is, or one that needs a little work. Many people buy fixer-uppers because of the lower cost, but sometimes those kinds of homes can end up costing you a lot more in the long run. Here are some things to consider when you're trying to decide whether it's smart for you to buy a fixer-upper or not.
1. What can you get in your price range?
Many first-time homebuyers are on tight budgets. They don't have a lot of money to spend, and they want to live in a good area. Overall, location is more important than the house, because the house can be changed. If you can't get into a good area without buying a fixer-upper, it may be worth considering. Just be sure you're really buying in a location you like and one that you want to remain in for a while so you can get the best deal and turn your house into a solid investment. Look at several houses, both fixer-uppers and finished, before deciding.
2. How handy are you, really?
There's a big difference between painting a room and fixing that plumbing leak. When you're considering a fixer-upper for your first home, make sure you're honest about your skill level. Don't buy into more than you can fix, or than you can afford to have fixed. By getting a good, thorough home inspection, you'll have a better idea of what kinds of improvements really need to be made. That can help you make the right decision based on the work you're able to do on the home.
3. How much savings do you have to use for repairs?
Repair budgets rarely get adjusted downward. Typically, it will cost more than you expect to repair a home. Even if you have plenty of savings, it's a good idea to get some repair estimates before committing to buying. That way, you'll have realistic numbers you can look at when you're trying to decide if that home is the right one for you. Surprise expenses can still crop up, but there will be fewer of them to contend with.
4. Do you have friends and family who can help?
If your uncle is a contractor and you have a niece in the design business, your odds of doing well with a fixer-upper just got better. When you have people who are in skilled trades and can help you work on your home, you can save a lot of money in labor costs and protect your investment more easily. It's not a requirement to have people like that in your family when you buy a house that needs work, but it can certainly help the process.
5. How long do you plan to live in the home?
Renovating a home takes time. If you don't plan to live in your first home for a long time, you might not want to buy something that requires a lot of work. You don't want to get into the middle of a renovation and decide that you need to move. It can be very difficult to sell a home that's in the middle of renovations, and you're likely to lose a lot of money in the process. Don't buy a fixer-upper you aren't really committed to keeping for years.
6. How is the market where you're looking?
If it's a buyer's market in your location, you may be able to get a great home for a much lower price. With that in mind, you could get into a home that needs less work and still not have to break your budget. Markets that favor the seller are going to have higher home prices, so buying a fixer-upper to get into a better neighborhood could be the way to go. There's nothing wrong with buying a house that needs some work, as long as you've done your homework and are prepared to handle the changes that need to be made.
7. Are the home's issues cosmetic or something more?
Cosmetic issues are things that can be lived with, even if you're not crazy about the way they look. If you have structural issues, though, you can't just leave those alone and not worry about them. They have to be fixed. Finding out which the home has and how much it will cost to correct any structural problems is very important if you're considering a fixer-upper for your first home.
William Giakoumatos is the current vice president of American Custom Contractors. They are a commercial and residential contractor company in the Washington, D.C. Metro area. Servicing businesses and homeowners for more than 40 years, ACC prides themselves with the added value from their work.