Buying a home that needs tender loving care is one thing. Buying a home that needs complete rehab means taking on a project that requires more than a dash of paint. For some folks, a rehab is not out of the question; for others, it is smart to avoid them.
Both options are viable, but you need to know what you are getting yourself into when it comes to buying a home that needs rehab work. The costs associated with a complete rehab can far outweigh the benefit and any profit you may make when you rent it out or sell it.
Let's take a look below at both buying a rehab and a fixer-upper. You will quickly see there is a difference between a rehab house and a fixer-upper!
First of all, let us establish the definition of a rehab compared to a fixer-upper house. A home that requires a complete rehab project is more than likely a property that has been left standing for a while without any attention whatsoever. A fair amount of time, the owners of these kinds of properties have run into financial difficulties. With a lack of money available, things that are needing work are often neglected, which exacerbates the problem.
These kinds of projects are not for the fainthearted. A rehab home means a lot more work, and you will probably end up with a list as long as your arm of things that need to be done. Fixing up a rehab often means replacing floors, along with significant systems in the home, such as the electrical, heating and plumbing.
Most importantly, you need to assess the property before you even call in the home inspector. If there are squirrels or other rodents nesting in the attic, it could mean you need to replace the roof. Is the HVAC system salvageable, or is it years past its prime and will have to come out? Are there any visible structural issues to deal with?
Doors and windows could be well past their useful life. At the end of the day, what are you left with? When it comes to rehab property, it is all too easy to end up with only four sound walls. For those in the construction industry, that may be perfect. If not, you might want to second guess getting involved with such a broad scope project.
Buying a rehab property is not a bad investment for the right person. If you are a building contractor, investing in cheap rehab property is often a smart move. After-all you have the skills and knowledge to deal with such situations.
A fixer-upper is a totally different ball game. Most of the time, you will get away with replacing the kitchen, flooring, the bathrooms, and decorating the property. Anything more than that, and you are entering rehab territory.
On top of that, the landscaping will probably need some serious TLC. But, if the swimming pool needs to be refurbished, you probably want to think twice before taking on the project.
In general, a fixer-upper is ideal for a first-time buyer or someone who can do a lot of the work themselves. Once you start bringing in contractors, the costs will escalate, and your fixer-upper is a non-starter.
It is all about being honest with yourself and not taking on too much. Sure, it is tempting that you can do it all, but in general, it is best to have professional skills if any work goes beyond rushing down to IKEA for a new kitchen.
Here are some essential considerations when buying a fixer-upper home. Make sure you are honest with yourself whether you are purchasing a rehab or fixer-upper.
If you have not done any property refurbishments before, a fixer-upper is the best way to go. Consider it a project and learn from the experience. One of the most important things you need to learn is how to budget. There are certainly pros and cons to buying a fixer-upper. From a positive standpoint, it's potentially an excellent way to save money.
Whether you take on a fixer-upper or a rehab project, the budget is crucial. If the cost of the property is going to outstrip the price you can sell it for, there is very little point in taking it on. In other words, it is easy to waste your money.
But that is not always true. For instance, if you take on old property to run a business from it, such as a guest house or Bed and Breakfast, it may eventually pay off. Many large older style properties represent excellent value for the money when you are planning a home-based business.
Should you take everything into account when it comes to the budget? Yes, you should. Costs of the most basic materials such as screws, nails, lumber, and finish material can quickly add up. Never underestimate how expensive any kind of property refurbishment can be, and how much time it takes.
A rehab project is what you should take on when you are planning to live in the property for a long time. Buying a fixer-upper is a great idea when you would like to spend a limited amount of time and money on the property and flip it in a matter of months.
A fixer-upper is a great way to start your real estate portfolio. A rehab home is what you take on when you have had enough of fixing up properties and would like to create your forever home.
Whether you are buying a fixer-upper house or a rehab property, make sure you ask questions. Do a thorough amount of research and due diligence. Make sure you don't just focus on the house itself, either. Have you scoped out the housing that surrounds the property? How about the neighborhood in general? Are there things in the area that might give you second thoughts about buying? Do you have kids that will be attending the school system? How are they rated? Are there modern conveniences you want nearby?
Remember that purchasing a home isn't just about the property but everything that does along with it. If you make a hasty decision, you could end up losing your earnest money, which could amount to thousands of dollars out of your pocket.
Anytime you are buying a property that needs an extensive amount of work, educating yourself is vital. Not doing so could be a significant regret after it becomes too late. Sometimes people bite off more than they can chew - you don't want to be one of them!
Use these additional home buying resources to make excellent decisions when buying a fixer-upper house.