Buying a house that needed work was probably the best house buying decision we made. Not only did it allow me and my wife to afford a home in an area that would have been out of our budget; But with the extra value-added, we’re now set up to buy a more expensive place if and when we choose to move on!
Buying a house that needs work is a good idea if you can buy your home below market value & added estimated works costs are in line with the average house price of the area.
You need to weigh up the costs of renovating a property versus the benefits. Whenever you buy your house, there are other things that impact the value of your house. This includes things like development in the area, the quality of schools, and crime rates. Then you have to assess the level of renovation work. Consider all these things, but focus on what’s in your control.
How to Find the Fixer Upper For You
Finding a fixer-upper isn’t easy but it’s not as difficult as it may seem either. If you don’t have much local knowledge of the area, it’s fine. There are a few things that you can do to get clued up on things. Here are the steps to take to find your fixer-upper.
- Find a potential area and community that’s for you
- Then find a house you like that needs work
- Then assess the renovation work required
- Then make your offer on the house
How to find an potential area and community
- Speak to work colleagues about different areas – Get the Pros and Cons
- Look up local crime rates
- Find local forums to read about recent activity in the area
- Find out about up and coming development in the area
When my wife and I were looking for a home in London, we had a task on our hands. Neither of us was from London, our budget was tight and we were on a timer. I was living with an aunt and my wife’s’ tenancy was coming to a close in Oxford. Thankfully we rose to the challenge.
Speak to work colleagues about different areas – Get the Pros and Cons
This is a great free way to learn about a potential area you want to move to. You can find out about how safe an area is, how good the transport links are as well as some of some of the querky aspects that only a local will know.
One bit of advice though, speak to people you trust and feel comfortable around, ideally a friend. If they like the area, the chances are you probably will too.
Look up local crime rates
It’s always worth checking out the level of crime in different areas of the city you are looking to buy in. Although crime, in general, is bad, I find it’s really useful to know what crimes are more common.
If home burglary levels are extremely high for instance; This will be more concerning for you then, let’s say shoplifting thefts.
If you live in the UK, Crimestatistics.co.uk can give you a handy overview of crimes committed in different areas by postcode, see below. Remember no area is perfect, unfortunately.
Find local forums to read about recent activity in the area
This is an awesome way to learn about the dynamics of your area. Some forums are public, some private. Just go into google type in your specified area+forum to find out more information.
You can pick up information from the local neighbourhood watch, find out what people in the area are up to. Its unbiased information that you are seriously unlikely to get from your real- estate agent.
Find out about up and coming development in the area
Knowing about building works in your area is really important to know. If for example, a highway is going to be built in close proximity to your house, it’s going to affect your standard of life as well as the potential future value of your house.
On the flip side, if you find out that there is a new train line being built near you, increasing transport links from the area, it gives you an idea of the future potential.
How to find the right house for you
Hopefully, you’ll have a good idea of what you can afford as well as your top budget. If you live in the UK the main online resources to use to find homes for sale are Rightmove and Zoopla.
With both resources you can find out what price houses sold for nearby and which houses have been on the market for a while.
Find a house that’s been on the market for quite some time, slightly above your top price and looks ‘dated’. The description will probably detail that some works need doing.
These properties in my experience tend to be ones that you can negotiate on a bit. In fact, that’s precisely what happened to my house.
It had been on the market for some time, advertised over what I could afford but needed to be fully renovated. I organized a viewing as soon as I could!
Assessing the Renovation work Required
When you go and see a property that needs work done to it, it worth understanding which jobs you can do yourself and which jobs you’ll need to call in a skilled professional in for.
Don’t worry if you don’t have that much experience in DIY. So many jobs can be learned really quickly and on site as well.
If you’re looking for a guide on jobs that may need doing, I’ve written a post on how to renovate your house on a budget that may be a useful guide for you.
If you are looking to have the whole job renovated by a building contractor; Get a rough price estimate on a ‘wish list’ i.e everything you would like to get done if you had an unlimited budget versus a ‘ necessary list’ detailing essential works like bathrooms, electrics, and any construction work.
Once you have this information, hopefully, you can come to a price point of what you would expect to have to pay to fully renovate the house that you are viewing.
Bear in mind that skilled tradesmen’s prices fluctuate massively. I have seen quotes from electricians that are literally 1000s apart for the same job. If you can get someone you trust or through a recommendation to give you a quote, it’s probably advisable.
Making an Offer on a House
So if you’ve been through all of the steps above, you should be in a good position to make an informed offer rather than trying to ‘low ball’ the seller.
The reality is that you are offering the current value of the property in consideration of the works that need doing. Nobody is ‘low balling’ anyone.
If you can sense that you can get a bargain, by all means, make the offer you think will get accepted. The steps outlined above is the approach I took when buying my current home. I like to think it worked out pretty well. Hopefully, it will be of some use to you as well.
What else should I look for and ask when viewing a house?
When you’re looking around the house look look in every corner of every room for any cracks or damp. This is a sign that major works may be required and it’s a bit of a red flag to be honest.
When you’re with the agent, and if they are clued up on their material ask them about bills, their view on the area as well as the water pressure. It’s more information that you can take into consideration before you make an offer on the house.
What should you do first when renovating a house?
Some jobs like electrical work and plumbing need to be done at the start of your renovation, or they can cause you issues and delay the rest of the work that you need to get done in your home.
Here’s a post that I wrote on what order to renovate your house. Hopefully, it can serve as a good general guide of how to order your jobs.
The general idea is to think about how you want to live in your home, where you want to put your TV, bedside tables, etc. All of these things will help you to understand where you need electrical points and switches for example.
It’s a good time to move your master phone socket as well, for your broadband router. Older homes especially tend to have them in impractical places. Here’s a post you can refer to on how I moved my master socket for free, should you want more information.
Related Questions
Should first time home buyers buy a fixer-upper?
First-time buyers have a lot to gain from buying a fixer-upper house. Being able to add value to your first home will set you up very nicely for your next potentially longer-term home.
Even if you intend to stay in the home that you have bought, the additional saleable value added to your property could help you secure a better mortgage rate over the foreseeable future.
With me, it was also a great opportunity to get into an area that I wouldn’t have been able to afford, had my house not needed work.
Is it cheaper to build or buy existing home?
Per square foot it’s actually cheaper to build your own home than buy an existing home.
Building your own place often requires more upfront cash (i.e money you already have saved) to buy the land and fund building costs. Buying an existing building requires less upfront money, but you have far more options when it comes to lending.
How much DIY work should I do myself when fixing up a house?
The amount of DIY work you do yourself comes down to money, time and the amount of work that you need to do.
Theoretically, you could do everything if you had the time, but it’s just not practical. My advice is to isolate the jobs that you can do quickly yourself and pay for those jobs that require more time and specialist skills like electrics and plumbing for example.
Here are some DIY jobs that I would recommend that you do yourself. I’ve included links to posts I’ve written as well should you want more information on what’s involved.
- Hanging Doors
- Choosing plaster or polystyrene coving
- Removing old tiles
- Wallpapering over old wallpaper
How long should you give yourself to buy a house?
Give yourself a saving deadline, and save accordingly. If you don’t take it seriously you will not build a pot of money up as quickly as you want to.
If you’re living with family or in cheap accommodation, take advantage of the situation by saving as much as you can.
Is it better to buy a cheap house and renovate it?
You should be weary of buying a ‘cheap’ house. Sometimes homes are cheaper because they are structurally unsound or require very expensive works doing on them, such as damp proofing coupled with a replacement roof.
Try and buy a place that is structurally sound that needs predominantly DIY improvements. If you do that you’ll have larger control over what you need to spend on it.
Can I get a mortgage for a house that needs work?
As long as your home structurally sound, has running water, toilet and cooking areas in the home, you shouldn’t have too many issues in getting a mortgage.
What makes a house unmortgageable?
If the house structurally unsound the house may be deemed unmortgageable. For example, if the house is subsiding which is an issue that causing your house to sink or collapse, you may not be able to get a mortgage on it.
If you’re looking to convert a property such as a barn, for instance, it probably will not be eligible for a domestic mortgage as it’s not a home. You may need to consider buying the house outright here.
Why are some houses ‘cash buyers’ only
Houses that are ‘cash buyers only’ are usually those that properties that would not be eligible for a mortgage from a lender.
There could be a number of issues associated with the property. The house could be structurally unsound and/or could have elements associated that are not up to current building standards or approved by planning boards.
It’s worth getting independent surveyors into assess any properties here, just so you don’t have any surprises that you were not expecting.
In Summary…
Buying a fixer-upper is a great idea, but you have to approach it correctly. The steps outlined in this article of finding a good area, and finding a home that needs work that you can also get a deal on worked for me.
Making sure you’ve done your due diligence on the local area through forums, online resources as well as people that you’re surrounded by at work for example can really help you to find the fixer upper house you’re looking for.
When it comes to scoping out how much renovation work is required, I’ve linked to some resources on my website that should help you roughly estimate how much work you need to do.
Before you make an offer on any house that needs work, it’s probably worth calling in a building contractor so you can understand how much it would cost you to get everything done. Hopefully thiswill put you in the driving seat and make you feel better when making an offer too.
Remember there are other factors on the price of your property, not just it’s condition though.
I’ve written this article based on my personal experiences. I am all about DIY projects. If you are looking to do any jobs yourself why not check out some more of my content here. Learn from my mistakes rather than making them yourself.