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buying a fixer upper as a first home

Buying a Fixer-Upper as a First Home: Pros and Cons to Know

Is it worth buying a fixer-upper as a first home?

For first-time homebuyers, stepping into the housing market can be both exhilarating and daunting.

 

Purchasing a fixer-upper as your first home not only offers an affordable entry point but also allows you to customize your living space from the ground up.

 

This option can make perfect sense financially and personally, especially when home prices are on the rise like they have been over the past several years.

 

This guide is tailored to equip you with the knowledge and strategies needed to navigate the world of fixer-upper homes, highlighting the potential benefits and considerations involved in transforming an overlooked property into your dream home.

key takeaways

Key Considerations for First-Time Home Buyers

  • Financial Planning: Detailed budgeting for both purchase and renovation costs is crucial. It’s important to include a contingency fund for unexpected expenses.
  • Long-Term Value: Renovations should be planned with an eye toward future trends and the overall impact on resale value, ensuring the home remains competitive in the market.

The Dream and Reality of Fixer-Uppers

buying a fixer upper

Anytime we do anything, there’s always some form of gap between the dream and the reality. However, I’ve found that the dream when renovating and rehabbing generally far outweighs any negatives.

Here are a few points to consider:

  • Transforming a House into Your Dream Home: The prospect of turning a dilapidated structure into a beautiful and functional living space is a powerful draw for many buyers, especially those who want to buy a fixer-upper as their first home. This allows for personal expression and the creation of a home that truly reflects your personality and needs.
  • The Allure of Fixer-Uppers: Beyond the aesthetic transformation, the allure of fixer-upper houses lies in the significant financial gains they offer. Buying a property that needs work typically comes for a lower cost of your home, allows you to save money upfront, invest in improvements over time and frequently increase the home value.
  • There’s Always a But: When you venture into homes that need work, you need to be prepared for potential surprises. Some may be bigger than planned and some will be very minor. We help our clients navigate every one of them plus any stress as they come up and work hard to keep the budget and timeline on track and within limits. However you proceed, know that these glitches are minor bumps in the road to your home creation.
  • Budget Benefits: By purchasing a home below market value, first-time buyers can stretch their budgets further. Renovations, especially in key areas like kitchens and bathrooms, can significantly increase a home’s value. A fixer-upper can be a good long-term investment as well as additional value when you sell the house.

Expert Tips to Consider When Buying a Fixer Upper

buying a fixer-upper as a first home

The Hidden Gems of Fixer-Uppers

  • For many first-time buyers, a fixer-upper can reveal unexpected potential, such as original hardwood floors hidden under carpet or historic architectural details covered by years of neglect. Discovering and restoring these elements can add unique character and value to the home. So be on the lookout for them!

Navigating the Renovation Process

  • It’s crucial to understand the full scope of renovations needed, which can range from simple cosmetic updates to major structural repairs. Partnering with experienced professionals can help estimate costs accurately and avoid common pitfalls in renovating older homes. (I know, we’ve said this before and might say it again…it’s THAT important!)

Costs vs. Value: What You Need to Know

  • While it’s important to focus on aesthetic updates, first-time homebuyers should prioritize renovations that increase structural integrity and energy efficiency, which provide substantial returns on investment.
  • It’s also critical to explore the various options for a home loan that are available to you. The includes analyzing the amount for down payments versus having to pay private mortgage insurance if your down payment is under 20% (usually that’s the minimum required to avoid what’s called PMI).
Costs

Getting Started – First-Time Renovators

  • Collaborating with skilled contractors who understand the vision and budget for your home renovation is vital. They can offer valuable insights into what renovations will offer the best return on investment and help manage the project efficiently.
  • Since you’re not buying a move-in ready home as well, you’ll want to get ideas and take action on at least some of the critical home projects. That can be one room to a full house renovation. In all likelihood, you’ll need support as you navigate that process.  And this is where we shine!  We help homeowners create a house that’s reflective of their dream and keep the costs they want to pay in line as well. And we do that by guiding them through the home renovation process and being their own general contractor and pocketing the savings of 20 to 30% on their project.

Creating a Personalized Space

  • The ability to customize a fixer-upper presents a unique opportunity for first-time buyers to make their mark. Depending on the house and style, each house is different yet each is a house that needs work. Whether it’s redesigning the layout to suit a modern lifestyle or choosing finishes that reflect current trends, each decision helps transform the house into a home.

The Joy of Seeing Your Vision Come to Life

  • There’s a profound satisfaction renovating a fixer-upper and watching your ideas take shape, from the initial demolition to the final touches of decor. For many, this journey is not just about creating a comfortable living space but also about the pride of homeownership and the ability to make your home your way.

Building Equity and Value Through Smart Renovations

  • Strategic improvements such as updating plumbing and electrical systems, improving insulation, and modernizing living spaces can drastically enhance the home’s market value and appeal. It’s important to know what items can have a serious positive impact and which will not, or, might even hurt your value.
  • Exploring your neighborhood and seeing what is “standard” in the area helps you narrow your focus in terms of what is important to have vs “nice to have”. By checking out homes in the same neighborhood, you can get an idea of features to include. You also find homes and their selling price to help you stay within market limits and not sink more into your home than you can get back out.

Pros and Cons of Buying a Fixer-Upper

Advantages

  • Cost Efficiency: Generally, fixer-uppers are priced lower than turnkey homes, allowing entry into better neighborhoods that might otherwise be unaffordable.
  • High ROI on Improvements: Effective renovations can significantly boost the home’s value, offering a good return on investment.
  • You get to create your dream, your way!

Disadvantages

  • Unexpected Challenges: Fixing up a house can uncover more issues than initially anticipated, potentially leading to higher costs and longer timelines.
  • Personal Investment: The process requires a considerable amount of time, energy, and decision-making, which can be overwhelming for some first-time buyers. However, whether you are your own general contractor or pay the premium to have a general contractor, the time requirements are about the same. This is one area where we help our clients.

Taking the Leap into Your Fixer-Upper Journey

Start Planning Your Renovation Today 

If you are ready to get going then let’s do it ~

First-time buyers should begin by first taking time to find a fixer-upper that has only the amount of work that they believe they can take on to start. Don’t go for a full gut project if that’s not what you want to do yet. (There’s always another opportunity in the future for that)

And action steps once you’ve found one:

  • Assessing the structural condition of the fixer-upper to determine what might need to be done,
  • Consulting with a loan officer about financing options like FHA 203(k) loans, a VA renovation loan, or Homestyle renovation mortgages from FNMA, which are designed to fund both the purchase and the renovation of a home. And verify that you can obtain the necessary finances to cover costs + some reserves. This can also be started while you are searching for the right property.
  • Contact us to discuss how we can help you save THOUSANDS on your home renovation or rehab project and get your home done on time and within budget! 

Ready to take your first steps toward homeownership and create a personalized living space that grows in value? A fixer-upper might be a great way to save you money and get a home that’s a great renovation project.  For comprehensive support and expert advice tailored to your unique needs, visit us at Net Gain Real Estate.com or click the link below. Let’s make your dream home a reality!