Home values continue to rise. For existing home owners, this is great news. But for new home buyers or investors looking to ride the wave, it creates a higher barrier to entry as well as more potential risk. Savvy investors and shrewd first-time home buyers looking for a deal on that fixer are also looking for ways to save on renovation costs. The remodeling market continues to benefit from an even stronger housing market (especially in Southern California) and in particular, solid gains in housing prices. The result is that these numbers are encouraging owners and buyers to make larger investments in their homes. With that in mind, we wanted to take a look at strategies to save on home purchases involving renovations and/or remodeling.
Here are some great property targeting ideas for home buyers looking to take advantage of fixer-upper real estate deals, while keeping renovation costs down and maximizing their budget:
Many urban and older areas experience this kind of transition and we've seen this in parts of Orange County, CA recently – think Downtown Santa Ana or Brea. We expect more and more house hunters to search in up-and-coming transitional neighborhoods —those in which a number of homes are being fixed up and beautified — because in most cases these properties will provide a great return on investment. These properties tend to be harder to find and often will sell faster due to the increased interest in the area and investment potential for buying on the low end of the market. The increase of house flippers in specific markets can also make these properties harder to obtain as opportunities for flipping profits drive up prices.
Livable Fixer Uppers
Many first-time homebuyers will want to look for homes chiefly in need of relatively easy, inexpensive cosmetic repairs (such as updating wallpaper or
28% of current homeowners surveyed said they remodeled to personalize their home after purchasing it recently. Modern homes with new upgrades and the latest design will cost you top dollar if you're a buyer. But some buyers will actually favor homes with out-of-date features and appliances, just to stay in their affordable price range. Buyers can plan to update certain items each year/season, according to their own tastes (and budgets) as they see fit. The main advantage is that they're able to expand their entry point and buy “more house” for a given amount of money going this route.
Foreclosures & Short Sales
It’s a common belief that the foreclosure supply is gone, but some parts of the country are still flush with foreclosures and short sale properties that can sometimes be obtained for pennies on the dollar. Finding foreclosures and short
Final Analysis & Warning
For investors and first-time home buyers looking to take advantage of these strategies, we advise working with a Realtor knowledgeable in the specific area you're looking. Often, they will have additional neighborhood data or future development insight that could benefit you further. Some of these types of houses can turn into “money pits” with difficult-to-estimate repair needs, so buyers should be sure to get a qualified inspector to check things out prior to making a purchase. Due diligence is another great reason to have an experienced Realtor in your corner. Also, even if you're taking the do-it-yourself route, consulting with a General Contractor sometimes isn't a bad idea. First-time home buyers typically aren’t equipped or solvent enough to tackle deep renovation projects that involve pulling building permits. In all these situations, the buyer should be careful not to get in over their heads and rely on your network of experts when in doubt.
Cutting corners on some renovations can save you time and money, while skimping on others may turn your project into a living nightmare. Make sure you have a plan before starting.
About The Author
Clark D. Brooks is a General Contractor and CEO/owner of Innovative Craftsmanship, Inc. - a full service home remodeling, renovation and construction company located in Newport Beach, CA. From planning and design, to completed construction and finishes, ICINC has the manpower, skills and knowledge to complete your residential or commercial project on time and within budget. When Clark isn't assisting others in designing and building their dream home project, he can be found assisting in his community. In the rare event he finds time to himself you might find him going to a classic car show, racing at the track, or working on one of his classic muscle cars.
sale homes is possible, and there is still a significant amount of inventory left in the hands of the banks (and some of it can be bough at a good discount). Also, here in Orange County, the cost of living remains an obstacle for many and keeps he foreclosure market active.
fixing landscaping) that they can fix themselves while living in the property. Some sellers simply don't want to go to the trouble of updating and repairing everything, but an industrious DIY'er can decide which items are most important and tackle those first. Young buyers should look for homes that are immediately livable, but that have just enough "ugly" to warrant a nice discount. Not only does "fix as you go" approach help keep costs down, but work can be completed in phases or sections of the house to break up costs even further. This approach can save a buyer a lot of money while providing a superior return on investment.
Remodel done by ICINC while home was occupied.