What to Know Before Buying a Fixer-Upper
12 tips from experienced investors.
You’ve been renting for the past few years and you’re done lighting your money on fire. You want to build equity in something and become a real estate investor. But there’s a slight problem.
You just started your career and don’t have much cash. The only thing you can afford is something that’s going to need some work: a fixer-upper. But the issue is you know nothing about home renovations.
Maybe you helped your parents paint some rooms growing up, but that’s the extent of your renovation experience. You know nothin’ about plumbing, electrical work, or carpentry. But you have YouTube and you’re determined to learn as you go.
It can't be that hard, right?
Wrong.
Fixer-uppers are a lot of work. If you don't know what you are getting yourself into, things can get bad, fast.
I learned this the hard way.
It's important to know what you are getting into before you buy a fixer-upper. So I spent four hours dissecting this mega thread on r/HomeImprovement, and pulled out the top 12 tips you need to know before buying a fixer-upper.
Let's get into it.
1 - Balancing work and a fixer-upper is challenging.
I got tired of remodeling a lot quicker than I thought I would, so now I maybe work on it one day every few weeks.
None of my remodelings are a priority though, it's just extra rooms I don't really use anyway. But working on your house + a job is a lot, and apparently, I'm lazier than I gave myself credit for.
2 - Renovations will take three times as long and will be twice as expensive as you planned.
I’m an estimator and when these big projects come along we plan for escalation on labor, materials, lost time, and project delays. Even though you don’t necessarily have to do this for a home renovation, there’s a lot that can come up.
I would get quotes on all the repairs and at minimum 1.5x that number to account for the unforeseen cost and project delays.
3 - It’s difficult to accurately list everything that needs to get done.
Getting a list of everything that needs to be done is like trying to count how many M&Ms are in the bag without opening it.
4 - Take your time and clean as you go.
Take it slow. Don’t be fooled by all the ridiculous home renovation shows, they’re so not based in reality.
Remember you have to live in a construction zone so be mindful of tearing too much up and making your living space a disaster.
5 - Use the “Ikea Test” first.
If you are a couple and buying a fixer-upper with someone I would recommend buying a complicated bed frame from IKEA to test your teamwork skills first.
DIYing fixer-upper with my partner has led to many arguments. I hear other couples do fine building things together though.
6 - Beware of “Handyman Specials”.
There are many houses out there that had issues that were at some point addressed by a "handyman" who didn't know wtf he was doing.
The current house we live in we bought in Feb of 2020, it was rented out by a renowned slumlord for around 5-8 years and before that the slumlord himself, Dennis the menace, owned it.
He was one of those guys who would use drywall screws everywhere, that's his calling card. So when the bathroom wiring was roughed in during a remodel and the new 12 gauge wire was tied into the original 14 gauge knob and tube in the attic, the drywall screws in the junction box told me all I needed to know.
Some of the worst problems were hidden. Carpenter ants had chewed through most of the trim on the 36 windows on this house... and he'd covered over the holes with asphalt caulk and painted over them.
7 - If you are going to do the majority of the work yourself, take breaks to avoid burnout.
I like DIY'ing. Once all the projects are done I get bored and start looking at what I could sell for and what new wreck I can get into. For the last house, I gutted/redid 3 bathrooms and a kitchen.
Replaced all the light fixtures/outlets/switches. Build a giant 10x10 shed with a loft. Ended up selling the house for double what I paid for it 4 years later. I no longer have the time to dedicate to this - if you do go this route know your weekends and evenings are going to be pretty much full until you're done.
I would always take every 3rd weekend off and go do something else to avoid burnout.
8 - Older houses are a pain in the ass; renovations aside.
Unless you have deep pockets, a healthy appreciation for old houses, and a lot of patience, it's a real challenge. Your utility bills are way, way higher. Stuff is constantly broken.
Most of what you're doing is not going to increase the home value at all but is necessary if you want to continue to live there.
9 - Fixer-uppers are difficult; even if you are hiring contractors to do most of the work.
Dealing with the work yourself can be super frustrating especially if you don't have experience.
Dealing with contractors can be equally frustrating. People in and out of your house, hoping they show up when they say they will, and having to accept that nobody is going to do work to your standard are all super frustrating as well.
10 - Beware of the “Fixer-Upper Multiplier”; every time you open a wall, your problems will multiply.
Every project has turned into 3 more projects. Open a wall, and find even more problems than you came in to fix.
The old owner did weird, weird things. I have to fix his weird "repairs" constantly. I do weird things that the next owner will curse me for lol. It's expensive and I have to find specialty parts occasionally and things don't always fit. It's always longer than I expected.
There are always problems. It's whack a mole of problems. I won't say I regret it but it's been so hard and expensive. Way more so than I expected.
11 - Get a good home inspection.
I am a general contractor, and builder and have done house inspections as a service for investors for many years. Knowing what is wrong will make it easier to decide whether you should purchase a house. If it’s a fixer-upper you should go through everything.
If the paint, trim, and flooring are bad then usually many other things were not maintained either. Pay a professional inspector a few hundred dollars to go over everything and make you a list. Then you will know what you are facing.
12 - Great contractors are almost always worth the money.
I was going to install 8 windows myself, but my wife talked me into paying for it. The crew of three did it before 1 pm, and I probably wouldn't have saved more than 2k.
Would have taken me at least a month of weekends. Plus that last one that'd get done next year. And the old windows woulda sat somewhere stupid until I figured out how to get rid of them in 4 months.
Have done plenty of work that I don't need the satisfaction anymore from something like that.
If you understand what you are getting yourself into, and you are determined to put in the work, renovating a fixer-upper home can be an extremely rewarding experience.
Fixer-uppers are not all sunshine and rainbows. If you’re considering buying a home that needs some love, it’s important to know that it’s not as easy as all the YouTubers make it up to be.