There is a lot of terminology in use to describe houses that need work to be livable. A “handyman special”, “TLC” short for (Tender Loving Care), “deferred maintenance”, “fixer-upper”, “classic style”, and the list goes on. These terms are so also widely used, that they can refer to even the most run-down and damaged houses. In this article, we are discussing the pros and cons of purchasing a property that only needs a small amount of work. Learn more about what to expect in our latest post!
The thought of buying a property at a discount, like buying an expensive item on sale, can be very seductive. But, just like when you go shopping, you have to shop smart. Just because an item is marked down from the sticker price doesn’t mean its a good deal. Like any smart shopper, you need to know as much about the product as you possibly can. Here is a list of pros and cons to help you make the right decision when buying a handyman special in Raleigh NC!
Pros
Lower Purchase Price
The potential savings of buying a handyman special in Raleigh is what makes it most attractive. You can get a big head start in the equity game when you buy a house for less than it is worth. Many people flock to new construction homes that are customized with all the bells and whistles. While these homes are great for showing off to your friends and family, you start out with only your down payment as equity. And by the time you take out the amount of money it took to close the transaction, and what it would cost to sell, you are usually in the red for the first couple of years.
I was able to achieve a 50% equity position in under five years by buying a 70’s ranch during a buyers market. While it did take a lot of hard work to get the property up to par, it’s a great feeling to know that you can sell at any time and get a big check.
Less Competition
The vast majority of home buyers want something “off the shelf” and don’t have the vision to create a brand new living space from something that is dated and “ugly.” When it comes down to it, there are fewer people in the market for homes that need work. Most people don’t want to add in the time and expense of making repairs on top of all of the other costs of moving and buying a home. You will likely have fewer people competing with you to buy the house, which in turn leads to more negotiation power and a lower overall price.
Freedom of Design
You can pick your paint colors, your choice of flooring be it carpet, hardwood, laminate, and tile. You are in the driver’s seat and can design your space as you wish. Changing the paint, flooring, and fixtures are the easiest way to revitalize a home. If you are more ambitious you can redesign the kitchen space with new cabinetry, stainless steel appliances, and maybe even adding an island. Same goes for the bathrooms.
Lot Size
Many of the new home subdivisions try and cram as many houses together as possible to increase profitability. It’s common to see rows of cookie-cutter homes on lots that are one-tenth of an acre with no trees and no privacy. This can be a turn off for some, myself included. Older homes in more mature areas tend to be on larger lots with large trees for a more natural feel. Large trees also provide shade during the summer months and privacy.
Maybe there is a neighborhood you have always wanted to live in, but it’s just a little bit outside of your current budget?
Cons
Budgeting
Things are more expensive than they seem. When estimated cots for renovations I always insert a contingency. This is just a percentage of the total number that allows for overages. A good rule of thumb to use for beginners is 20%. So, if you plan on spending $20,000 to renovate the home add in another $4,000 to account for overages. This will cover the unexpected items that you discover after living in the home for a while. Also, if you are doing all the work yourself you will have to purchase a good amount of tools. Buying tools gets expensive quickly, but good tools will be necessary for your DIY projects.
Ignore What You See on TV
Forget everything that you see on TV. I remember a famous reality star is quoted as saying “reality shows are anything BUT reality.” Expect to put in hard labor, long hours, cuts, scrapes, and sore muscles. It comes with the territory. Also, if you are employing contractors to do more extensive renovations you should expect problems. Issues such as permitting, delays, deliveries, and holding people to their word is all part of the job and can be very stressful.
That said, if you are prepared for these things going into the sale, you will be able to save yourself a lot of time, money and frustrations.