Is It Worth Buying A Fixer-Upper?
There are enough TV shows, YouTube channels, and Instagram and Facebook accounts that romanticise and exalt property renovations to pure entertainment but is it worth buying a fixer-upper?
27/06/2023
Fixer-uppers: Yay, nay or maybe?
"Don't get me wrong here, buying a property that requires lots of work can also be lots of fun but you need to approach this honestly and with an open mind and more than a dash of patience!” says Skoko Sebola, Principal at Leapfrog Midrand.
"We have all come to associate the term “Fixer Upper” with a property in need of work, whether it is structural improvement or simply a more aesthetic approach. What is a fact is that the prices of the majority of "fixer-uppers" are marked down due to their condition and can be picked up at a price that is far lower than the average price for a similar property in good condition.
“For first-time home buyers looking to get onto the property ladder, a fixer-upper is simply a way to do this and an opportunity to purchase property in a specific area. For others, it is a passion project - that of taking a house in bad condition and turning it into one that will sell for a good profit. Whichever way you look at it, tackling a fixer-upper can reap rewards and bring a property back up to a more realistic market value,” Sebola shares.
There are a couple of factors worth taking into consideration before committing to a fixer-upper, not least of them being whether you enjoy wading through dust, cement, building rubble and the like!
Location, always
“The worst property in the best area is a far better purchase than the best property in an undesirable area” is something of a property maxim, and definitely a guiding principle when purchasing a fixer-upper. “The reason is simple. Much can be done to improve the look and feel, and even the structure of a property, while it’s a lot more difficult to improve an entire neighbourhood. In other words, if the fixer-upper is the way to ‘get into’ your neighbourhood of choice - do it,” Sebola says.
Good bones
Since, by definition, a fixer-upper requires work, before taking on a project of this nature you should be well aware of the work involved. Assess the property to determine whether or not it will be a project that will yield results and not end up costing more than it should. You do not want to have to make major alterations to the floor plan by having to move rooms around. Bathrooms and kitchens that are plumbed in are far more difficult and expensive to move than simply moving a wall here and there to enlarge a room.
Also, make sure the property is structurally sound, or make very sure of the issues that will be addressed, you do not want to replace the entire roof with the budget already set aside for other rooms, especially if this happens after taking ownership. “It is in your best interests to have a qualified building inspector run through the property and provide you with a professional assessment of the condition of the property and any areas where you can expect to spend money,” Sebola advises.
When planning for the renovation it is important to draw up a detailed list of structural and aesthetic fixes, keeping in mind that structural changes must take priority.
Structural/fundamental elements include:
- • Shoring up foundations
- • Fixing or replacing the roof
- • Remodelling the kitchen and bathroom
- • Replacing the windows throughout
- • Building new additions like bedrooms or a garage
Aesthetic changes would include:
- • Patching walls and painting
- • Installing new light fixtures
- • Replacing doors
- • Refacing kitchen cabinets
- • Fixing minor plumbing issues
Return on investment
Even though any fixer-upper property was purchased at a discounted price it will require work and require a substantial outlay before it becomes viable for sale. “A good approach is to use what you save on the purchase price to fund the improvements.
During negotiations to purchase the property, registering a larger bond may offer the solution for the capital needed for repairs. Consultation with a financial adviser and drawing up plans that clearly outline the work that needs to be done and how the property will look upon completion will assist in obtaining the necessary funds.
Manage expectations, and be patient
Any knowledgeable renovators will advise you of two important things: The first is that you must expect to do some of the work yourselves and the second is that there are always unexpected costs to be encountered. “Be aware of what you’re in for, clearly define your goals and budget, and keep your eye on the desired final outcome, and it will be fine!” Sebola believes.