Purchasing a “fixer upper” can be a great thing. Some distressed homes on the market, which are often overlooked by buyers, go for a great price and with a little time and effort can even turn a profit. Not all fixer uppers are good real estate investments though. Some may have irreparable damage costing buyers more than they could have ever imagined. If you’re looking to purchase a fixer upper, here are three categories of homes to help you tell the difference between a potential money maker and an endless money pit.
The quick fix:
This is the house in dire need of a makeover. Perhaps the home is outdated and it’s past owners did not want to put any more time or money into quick cosmetic fixes such as new paint, carpeting, appliances and countertops. This type of house is in need of some TLC but has all of it’s major foundations and systems intact. This fixer upper may be the best option for buyers looking for a worn but livable home that can look new again with a few simple interior upgrades that won’t break the bank.
The hidden gem:
The hidden gem type home is a perfect deal for buyers willing to put in the extra work to turn a fixer upper into a dream home. While similar to the quick fix in the sense that this home is in desperate need of a cosmetic makeover, extra work such as remodeling and exterior fixes will be required costing the buyer more. Bad architectural design, leaky roofs, and plumbing projects can turn some buyers off, but again, if the buyer is handy enough or willing to put in the work and pay the extra expenses, it can be worth it.
The money pit:
Buyers beware: if a home has any major structural, geological, environmental, or foundational problems, it is NOT a fixer upper, it is a money pit. While these homes are often sold on the market for a very low price, it is important to remember the mass amounts of money that will need to be dumped into repairs, remodeling, and major fixes that may be impossible to ever restore. Purchasing this type of fixer upper will leave the buyer in a hole with zero profit and no return on investment. Some signs of homes that are considered “money pits” are homes with structural problems beyond economic repair, homes with major asbestos or mold issues and homes with unmanageable fire, flood, or earthquake damage.