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Is Buying A Fixer Upper Right For Us

Hi friends! If you are like me, then you are curious about the “fixer upper” market. It seems to be the hot trend in real estate right now and every where you turn it seems like more people are jumping on board to see if they can cash in.  Whether locally, within your own network of family & friends or on social media & television, it’s all the buzz and rightfully so. There can be a huge financial gain when entering into this rewarding game of real estate. But we all know how risky and time consuming it can also be, especially when doing all the work yourself. So the question is, is it right for us?

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Being in this industry I know the value I bring. And it’s big. But….there are many components to this kind of endeavor.  And it should be entered into very cautiously. Now I know I said I was going to be more fearless this year but….with this, I think thoughtful planning is imperative.

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It’s hard not to get caught up, I see stunning images all over social media and in my heart I know what I am capable of. Can I do this? YES, for sure! But…I have my time, family and the financial commitment to think about. I am not disillusioned in any way by how much work this would take. I have seen and done enough on my own with previous properties to know first hand.

The other thing to consider is the housing market and prices within my own area. I live on Long Island, which often has been compared to California in home prices and taxes, it would blow your mind what we pay. I have looked into other, more reasonable areas but at the end of the day I need to be in the same vicinity of the home. I have watched videos, listened to podcasts and am currently reading a fantastic and very helpful book about real estate investing.

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Over the weekend we looked at a potential investment and we walked away feeling it was overpriced, especially for what we would need to do. We also went to a gorgeous open house, in a prime “Hamptons” location and spoke with the seller, who does this as his livelihood. In that conversation I saw how much blood, sweat, tears & time he poured into the home. And what a risk it really is. Wowza! It was a real eye opener.

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John & I love looking at real estate, so we will keep at it but I also realize I am not on anyone else’s timeline here. I am not going to jump on this train unless it’s really the right fit for us, that includes everyone. This may not be the right season of my life to look at this kind of investment. But I also realize you have to be in to at least know, and knowledge certainly is power.

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I am not going to be fooled by the fun it brings watching “Fixer Upper” shows because within that one hour is an incredible amount of work & sacrifice that goes along with it. Plus watching & doing, even though I LOVE this stuff is so different, we all know that. If you ever want to be talked out of this idea yourself watch My First Flip, I think its on the DIY network. You will get this out of your system real fast, lol.

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So if you are considering buying a fixer upper as well, here are some things to think about…

Can you afford the initial cost of investment?

Are you investing in a good location?

What is your anticipated renovation cost?

Do you have the right people, that you can trust in your corner?

What are some hold ups you might encounter?

Do you have a back up plan? Can you rent it or cover rent if you can’t sell right away?

What is your time frame for renovation? Can you cover the mortgage in the meantime?

What will be your cost to sell? Are you a realtor or know someone who can cut their rate?

Can your family handle the commitment?

Do you know the market well enough?

Will you make enough for it to be worth your time and money?

What are the income tax ramifications, short term capital gains versus long term?

 

I am not an expert what so ever!! But these are things I have been asking myself so I thought it might be helpful to share. If you are like me, then you might be tempted by the idea of fixing and selling a property too and honestly it’s not for everyone. If you have any insight I would love if you would share, you can leave in the comments below or email me.

Have a  happy day!

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13 Comments

  1. Very wise introspection to entertain Jenn. My oldest son flipped houses fixing them up with all his own labor while working a full time job. He wasn’t married at the time so the financial part wasn’t as risky for him at the time. He flipped about 5 houses before he got married and moved to KY.
    The home we bought in KY he had purchased and completely redid inside and out, wow was I pleased. Real estate in KY isn’t nearly as expensive as where you are or CA where we had lived for 21 yrs. We had 1 1/2 acres, 1500 sq.ft 1 1/2 bathroom, a pantry, redone kitchen, nice dining room, 3 bedrooms, small family room. entry, he added a big front porch for $55K in 1999.He added windows across the front, redid the back deck,all new roof and siding, new vents, new carpet throughout. When we bought place we bought all new cabinets for kitchen, new stove and frig we bought in MT for the house. We’d seen house on a visit there before moving so had idea what we needed. I still miss that house and land. After 5 yrs. the climate was wearing me down too much, I have arthritis, asthma and allergies.
    Real estate in Grand Junction area is comparable to southern CA prices. We live few miles west of G.J. out in rural area. Our two youngest kids live in area, two oldest live in San Diego.
    Happy daze

    1. Hi JaneEllen, it so much different when you have children as I know from experience as well. I am sure your son had fun doing those 5 houses, you do have to love that sort of thing because its such a commitment. I hear you, it looks like CO real estate isn’t so reasonable anymore, bummer. Have a good night, Jen

  2. Very wise words, we are just considering buying a second property to do up and either rent our or sell here in France. Here the market is very different as it is very slow and can take years rather than months to sell a house, but on the up side there are some incredible bargains to be had. But most of all you are so right, careful consideration is what is needed rather than just jumping in at the deep end. The jury is still out on what we will do. Food for thought indeed.

  3. My husband and I have done a form of flipping for years. We live in an expensive/high demand area. We’ll buy a fixer upper and live in it while working on it. We both have full time jobs and we have 2 kids so the work takes a good 2 years. Then we sell, buy another house in the area putting the profit from the prior house into the new house. We are in our mid 40-ties now and I will say we’re both getting tired of spending vacations and weekends doing house projects!!

    1. That is so smart Adele! We have often thought about that as well. Not sure this is the right time but…we will see. Thank you for sharing this insight!! Jen

  4. I’m sending this article to a friend of a friend who is determined to flip houses because he keeps seeing properties that are “priced so cheap you can’t lose” but has no idea how costly renovation can be, nor does he know any actual skill in carpentry, plumbing, electrical or real estate valuation. Last week I regaled him with horror stories of the insane things contractors and sub-contractors have done when cutting corners (I’m often hired to represent engineers and architects in professional negligence lawsuits), but he’s convinced that won’t happen to him. After, I told him to do what he wants – he’s an adult. Just don’t come to me for help filing for bankruptcy to get out from under a mortgage on a property he can’t offload!!

    I hope he’ll at least consider your list of questions!

  5. Great post! My husband and I are in the middle of renovations for a fixer upper we purchased and the process couldn’t be further from the show “Fixer Upper.” We plan on living in the house once the renos are complete and have no prior fixer upper or real estate experience aside from purchasing our first turn key home several years ago. I’d say the biggest challenge has been budgeting for the renovation. In the beginning we had visions of spending our budget on waterfall islands and marble bathrooms. Now we’re forced to prioritize that budget repairing the compromised foundation and waterproofing the basement. My biggest piece of advice would be to take whatever estimate your contractor or yourself have budgeted and add 20% to it for the inevitable unknowns that will pop up.

    1. That is super smart advice Julie! Thank you for taking the time to share this. Good luck!! If you ever show them online tag me, please:)! Jen

  6. I love your tips on “thinking it through.” My mother is a realtor and my father does construction. My fiance and I started looking at houses a few months ago. One of our questions was whether or not we should buy a fixer upper. I, too, love watching the shows on HGTV. After thinking through our options, we decided that we would buy a house that just needs cosmetic work and live in that for a few years. Who knows… maybe we will really enjoy fixing up our house and we will want to do it again for someone else. If you have any tips/advice please let me know! I love your blog!

    1. Hi Jerra, that is a fantastic idea! And it’s a nice way to get your feet wet and see if it’s something you can take further. I wish you both the best of luck!! Thank you for leaving this comment and for your kind words, Jen

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