Whereas it may seem like ‘easy money’ to be buying, fixing up and selling property, there are a lot of things that can go wrong along the way! Any such investor needs to be aware how reality really looks like when buying these ‘renovator dreams’.
Make an Informed Decision When Buying a Fixer-Upper
Stumbling upon a diamond in the rough and transforming it into a show house is a common fantasy, especially among DIY enthusiasts and people who love older character homes, but there can be a stark contrast between the dream and the reality if you don’t have a clear understanding of what lies ahead – and what can go wrong.
Sandy Geffen, Executive Director of Lew Geffen Sotheby’s International Realty in South Africa, says: “There is no doubt that successfully completing a renovation project is an incredibly rewarding experience, but the success of the project depends on several crucial factors, most of which begin and end with you – the investor and property owner.”
“If you are considering buying your first fixer-upper, my advice would be to begin your research with some candid self-analysis to determine whether it’s the right thing for you – and if it’s right for you right now.”
“If you can honestly answer yes to at least five of the following questions, there is every chance you will be able to tackle the project head-on and circumvent most of the nerve-wracking and potentially costly pitfalls.”
- Do you thrive on the challenge of taking on new projects?
- Do you have any experience with building projects or artistic renovations?
Do you have the general knowledge to deal with this kind of endeavour?
Have you ever dealt with builders and architects in a project of this nature?
- Can you already envision the end result?
- Are you creative, hands-on, or handy?
- Are you patient and calm under pressure?
It may take time to find the right property, after which further delays beyond your control are very likely, especially with older homes that commonly reveal unexpected surprises along the way.
- Do you have the time to commit to such a project?
Even if you are not actively involved and merely overseeing the process, it will be very demanding on your time.
- Are you a team player?
Are you able to consider the advice and opinions offered by a diverse crew with different skill sets and qualifications and merge them into an efficient team?
- Are you prepared to handle and diffuse crises if or when they occur?
Geffen says once you have made the decision to take the plunge, the next step is to consult an experienced real estate agent to help you find the right property as you are more likely to be successful searching for probably your largest investment with the support of someone that you trust implicitly.
“An online search will give you a good idea of what is out there and is a great place to start but an agent with a comprehensive understanding of all that is involved with such a purchase can be an invaluable resource as buyers weigh their options.”
She adds that the ideal fixer-uppers are usually those that require mostly cosmetic improvements as the renovation costs will generally be much less than what they return in market value.
Major structural repairs and upgrades can be very expensive and time-consuming to complete with aggravations like delays more likely.
Factors to consider when looking:
- Location, location, location
The golden rule doesn’t differ for fixer-uppers. Choose a sought-after or up-and-coming area that has key amenities and is in close proximity to good schools.
This can vary widely, but if you want to minimize costs, look for a home that has ‘good bones”—a solid roof and foundation, a good floor plan that suits your needs as closely as possible and quality construction.
Search for houses that have the approximate square meterage and number of bedrooms and bathrooms you desire because adding rooms is where costs can really begin to escalate.
Kass Bunkell, Lew Geffen Sotheby’s International Realty Area Specialist in Craighall and Hurlingham, says that purchasing a fixer-upper is often the only option available to buyers who want to purchase a home in a neighbourhood that is beyond their budgets.
And the key motivation is no longer a desire to move up the social ladder.
“Decentralisation, rampant expansion of commercial nodes in the northern suburbs and intensifying traffic congestion have significantly influenced buying trends in recent years, with proximity to work and good schools now topping the wish list for most buyers.”
However, she cautions that buyers who purchase older homes out of necessity rather than a desire to take on a renovation project must be extra diligent about due diligence to ensure they don’t end up with a property which becomes a financial burden to maintain.
“Homes that need significant structural improvements, foundation upgrades or major repairs like plumbing and electrical system overhauls take time and money to upgrade so are best avoided but these issues are often impossible to spot so it’s well worth paying for a professional inspection before you take the leap.”
Geffen concludes: “Whatever renovation is required, it’s usually most cost-effective and rewarding when you, as the homeowner, pitch in and get involved in the project, and not only in a supervisory capacity, so be prepared to roll up your sleeves and get stuck in.”
“The pleasure and satisfaction you will experience upon completion if all goes well are a wonderful reward and the reason many people want to take on such a project. But remember that success is dependent on careful planning, including labour and materials and, very importantly, the skill, knowledge, and professionalism of the team members that you choose to work alongside you.”
Issued by Lew Geffen Sotheby’s International Realty – http://www.sothebysrealty.co.za