Online estate agency Tepilo analyses what buyers should consider when purchasing a doer-upper – from future resale price to location.
Property buyers - here's how you can purchase the right ‘doer-upper’
If you're looking to purchase a property relatively cheaply, convert it to your tastes and then sell it on for a decent profit further down the line, taking a gamble on a ‘doer-upper’ is likely to be your best course of action.
If you purchase the right doer-upper in the right area, you can reap considerable rewards in the long-term. Of course, a doer-upper home will involve a lot of work to bring it up to the required standard, but with some clever DIY and home décor changes it can be achieved on a reasonable budget. And, best of all, the asking price will be massively increased when you come to sell.
Set yourself a budget
If you're going to take the plunge on a fixer-upper, you need to be clear in your mind what your budget is when it comes to renovation and improvement costs. If you can't afford to refurbish the home in the way it needs, there is little point in buying it in the first place.
If you – or people close to you – have the expertise to do the necessary work without calling on outside help, this will save you a considerable amount of money.
However, if you need to hire the experts in to do the work for you, it might be useful to take a contractor with you on the viewing to get some rough quotes on how much the required home improvements will cost.
When it's clear what home improvements you need to make, you'll then need to work out what supplies you have to buy and how much these will cost. It's always best to overestimate, just so you have enough left over if costs mount up or any unexpected costs appear.
Work out what is needed
Does the home need wholesale renovation or more cosmetic improvements? Some homes may benefit – and rise in price – merely through new décor, a refreshed kitchen or windows being replaced. This will prove less costly and time-consuming than a whole refurbishment but will also result in less return on investment.
If a home needs more significant improvements, this will inevitably cost more, but is likely to lead to greater rewards in the long-term. If you don't have the time or money to tackle a full-scale renovation, it could be worth purchasing a home that is more liveable and would be enhanced by minor improvements.
Concentrate on location
Location is always important when it comes to buying a home, and is even more so the case with a doer-upper. The old adage of 'buying the worst house on the best street' is sound advice to follow, as homes in desirable areas will be attractive to buyers if you ever come to sell.
The future value of your home is also likely to go up if you buy in a good, in-demand area.
So, when it comes to viewing your fixer-upper, pay close attention to the homes around it and the street it's on. It might not be worth your while purchasing a doer-upper in a down-at-heel area, as you could struggle to sell in the future even with the home improvements you have carried out.
Up-and-coming areas – the booming locations that have just started to become recognised on a wider basis – may offer good investment opportunities. Homes here are likely to be cheaper in the short-term, but prices could go up as people begin to discover the area and it attracts greater demand from buyers.
Make sure you get a survey
While the majority of home-buyers will see the mortgage lender's valuation report as a thorough home survey, this is not actually the case. Something more comprehensive will be needed to ensure you know what you're getting yourself into.
You may wish to employ a surveyor acting entirely on your behalf when it comes to purchasing a fixer-upper, offering you impartial advice on the home in question. While a fixer-upper will require a fair bit of work, you don't want to be faced with structural defects or severe damp issues, or serious problems with, say, a roof or guttering, as this will merely prove expensive and stressful to remedy.
Stick to your guns
There is the chance, with a doer-upper, that problems will occur which could lead to your budget being stretched more than you anticipated. It could also see the planned end date of your project pushed back by a few months, or even longer.
A doer-upper will cost less in the first instance, but you have to weigh up whether the home improvements required will make the initial saving worthwhile or not. Before you choose to purchase this type of property, go through the upsides and downsides to decide whether it's worth it.
If you think it is, commit to it fully. And, even if issues arise, try and push past them. The long-term rewards are likely to make it worth it.