How To Find A Great Fixer Upper in Raleigh

Buying a “fixer-upper”, or “handy-man special” can be a great way to build equity more quickly.  Provided you by at a proper discount and do not overpay.  Finding the right property to suit your level of experience can be a daunting task.  Especially when you’ve been looking at 100’s of properties for the better part of a year.  In our latest post, we explore the signs of a good fixer-upper property and show you what to do in order to find them! 

Before you put money down on such a property, there are some key points you need to consider. Rehabbing properties isn’t for the common DIY’er or the weekend warrior.  It is a far more serious commitment.

However, when done responsibly, you can create a contemporary living space and a great nest-egg for the future!  Ask yourself the questions below to determine if buying a Raleigh fixer-upper property is right for you!

Are The Repairs Cosmetic or Structural?

Generally speaking, most investors want to avoid structural problems and stick to cosmetic improvements.  Cosmetic repairs include carpet, paint, wall-paper removal, popcorn-paint removal, installing hardwood flooring, upgrading fixtures, and lighting, landscaping, upgrading counter-tops and cabinetry, etc.  A key point here is that an ugly house from the 70’s will be completely livable, and a bank will loan you the money to buy it.

Structural repairs are another story; these include foundation repair, rotten floor joists, and sub-flooring, standing water in the crawl space, etc.  These jobs require professional contractors and can be very expensive.  Also, replacing the roof, HVAC, and ductwork in the home, while not technically structural, can be very expensive and must be carefully considered before buying.

A few years ago I bought a 70’s ranch as my primary residence that needed a lot of updating.  Everything in the home was original including the wallpaper.  There were no structural problems and the roof had been replaced in the last five years.  The only issue was the duct-work was original and the HVAC was from 1991.  Good thing I know a great HVAC contractor that was able to replace everything for about $7,000.  I bought the home at enough of a discount to justify coming out of pocket on this.

DIY vs. Hiring a Contractor

Certain tasks will require professionals.  While most people can teach themselves how to paint, landscape, remove wallpaper, and replace some fixtures, you will need a contractor for roof replacement, HVAC replacement, and any work requiring permitting.

Forget about what you see on HGTV.  While this may be a source of inspiration, TV is a form of entertainment.  Be honest and real about what you can do on your own and what will require a professional. Many people are overly ambitious and will find they need to enlist the help of professionals for projects they thought they could do on their own.

Needle In a Haystack

In order to find a great fixer-upper, you will have to do a lot of searching.  Unfortunately, many fixer-uppers that are on the MLS will be cost prohibitive.  Meaning the property may only be discounted by an amount equal to the repairs needed.  This leaves no real incentive for the buyer to do all the work.  For example, if a buyer has $250,000 to spend on a new home why would they buy an older home for $230,000 that needs $20,000 in repairs.  It is much easier to buy something off the shelf, especially new construction where the home can be customized.  All renovation projects carry the risk of unforeseen repairs and problems which can jump up and bite you later.

Finding a fixer-upper at a reasonable discount requires tireless searching and negotiation.  You will need to be persistent to find the right house.

Accurate Cost Estimation

This comes with experience.  While there are many books on the market for estimating rehab costs, it will depend on the area you live in.  If you are sticking with cosmetic work like carpet and paint.  These types of estimates are easy to get.  Once you have the room measurements you can shop around and get the best price for your carpet, padding, hardwoods, laminate, tile, etc.  Do your online research for tips on estimating these costs.

If you are doing it yourself, allow yourself some extra money for tools.  For example, if you will be removing wallpaper and painting, you may want to invest in a steamer.

Whatever you estimate for repairs and tools give yourself a margin of error.  Twenty percent is a good benchmark for beginners.  Therefore, if you think the renovations will cost a total of $10,000, add on an extra $2,000 as a contingency.

Beware, the term “fixer-upper” can be used to describe a wide range of properties. A damaged and dilapidated house might be called a “fixer-upper” but it is not the kind of house you will want to mess with!

Would you like to learn more about how to find a great fixer upper property in the Raleigh -Durham area? We can help! Send us a message or give us a call today! 919-473-6885

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