Deciding whether to purchase a fixer-upper or go with a home in need of fewer repairs isn’t always simple.
Supplies, Labor and Time:
Improvements often add to the cost of property taxes and insurance, so be sure to consider the long-term consequences. Properly performed repairs and renovations may help or hurt property tax values and homeowner insurance costs. It’s a good idea to get an estimate in advance. On the other hand, hiring outside crews to perform needed repairs can result in a tax write-off for investment properties.
Long-Term Profit Potential:
Repairs and renovations can make your home more valuable, but only if the surrounding area is desirable. Whether investing for long-term appreciation or cashflow, carefully evaluate the desirability of the neighborhood.
Lenders often have different rates and requirements for properties in need of repair.Find out in advance if you are eligible for special funding, grants or tax incentives, especially when working with affordable housing options or first-time homebuyer programs.
Building Codes and Zoning:
It is imperative to understand local building codes and zoning regulations before purchasing a fixer-upper. Never assume you can modify a structure without considering the building code. Likewise, zoning may dramatically alter the ability to use a property in a specific manner or make certain changes or additions.