is it smarter to buy a fixer uper house or a finished house?
 

I got to thinking a while ago when someone told me about a $10,000 mortage they have - it shocked me cause mine's only about $1000 - but then i stopped and realized i spend usually over $10,000 a month in reno in the last few houses I've bought..

which is the better route? not going to make much when i sell them but i'll get my money back and then some - but no different then if i bought a finished product..

i feel safer with something i can renovate though - always worried the money will stop even though i've been a constant earner for years and years - i like small commitments with the option to throw in larger cash when i feel like it vs a large scarry one

thoughts?

Are you talking for rentals or to live in?

To live in... I think a smart decision is finding an undervalued house that could use some work or renovation, make the changes you want for a great price and suddenly the house is worth a hell of a lot more than it was before you bought it, AND you saved a ton of money plus its somewhat customized for your needs.

Scott do a deal with you, I will teach you about property development you teach Me about net stuff.

fastest ROI will be on cosmetically rough properties that can be cleaned up quickly with cheap unskilled labor. (painting, roofing/siding, landscaping)

you should try to tie up the property in the longest escrow possible (90+ days) and get an agreement to begin rehab during the escrow as part of the sales contract.

then as soon as the prop has curb appeal immediately remarket and attempt to double escrow. this procedure gives maximum leverage because you minimize debt service.

I dont know much about realestate, but I can tell you ... dont walk away from fixer upers in nice areas.

depends on if you have contacts to get the house fixed up for a good price or if you can do it yourself. i did most of the work on my house before i moved in, and the stuff i did after i moved in i wish i would have done before. its a pain in the ass to do most stuff after you're already living there. i saved a shitload of money buying a house that needed work though.

its really handy to buy a furnished house but sometimes you want to inject your creativity on your own aboard.

I miss Reno. I lived there for 12 yrs. Way better than Vegas.

fixer uppers are where its at, provided you dont get carried away in what you put into it :2 cents:

Damn when did roofing and landscaping become unskilled labor? :winkwink:

I prefer to do what you are doing. Buy the fixer-uper and fix as you go. I had about a $5k a month mortgage at one point, buying brand new and huge.

That was a commitment. And my financial planning had to be more accurate. I since sold that house and made a nice profit (In San Diego, EVERYONE made a profit).

Long story short, I just got another house in the Half Million Dollar range. The payment are only around $3k a month, and I find that I am more comfortable with dropping 3-4K a month on fixing it up. Not to mention, it all gets done the way I want it, and not how the previous owner wanted it.

I bought my house as a fixer upper.... I got a really good price on it for that reason, I could prob sell and make 50k already. I had to do alot of work including fixing EVERY tape job on the drywall... pain in the ass... had to redo every room's ceiling etc... stuff like that, but a house sold across the street for 45k more the other day so I think i'm happy with my buy :thumbsup give it 2 years keep on fixing in those 2 years and i'll be laughing :winkwink:

If your dropping 1k on a mortgage payment while someone else is spending 10k. Even if you are spending 10k a month on renovations you are the generally the better off party. Assuming the renovations are of the proper type in a house that actually adds a good return in value, or at very least the lack of them being done had kept the houses value down around 40-50 cents on the dollar in renovation costs for that project. Area's like curb appeal, kitchens, bathrooms and so on. Where you always see a very good return of costs.
My thoughts would be that the 10k a month person is having a large chunk of that 10k just go to interest on the mortgage while the extra 10k your spending is going to increasing the value of the property above and beyond the normal appreciation rate.

Reno is awesome! I love it too. Never lived there though.

If the diference in monthly payment is a few hundred dollars per month between a house that needs work and a place that has been renovated extensively go for the renovated house. I can find a much easier ROI spending cash on other investments than housing. The money that would go into renovations is then locked up until a sale. Should a market turn or the house become unsellable, I have little to no money out of pocket. It's easier to get in and out when you have little interest in the property.

im geting ready to buy my first house....going ahead soon and we are going back and forth on price and what we will buy...big decision..i want to buy something that isnt even built yet as you get the best price...but finding a fixer upper would be awesome if i could do most of the work..i could perhaps make 30-40 k on the sale in 3-4 years.

im also going for a reasonable mortgage but with the option to pay upto double each month and to make a one time lump payment on principal once a year

It all depends on what's right for you. I didn't even want to buy a brand new house because I wanted everything already installed and if there were any defects, I wanted them known about and repaired already. I wanted to move in and live, not work on a house.

I've been here 4.5 years - the house was built in 1997. Except for normal maintenance and some things I've added (steps to the lake, fence) I've not put a dime into working on it. I like it that way :)

Buy the worst house in a neighborhood and bring it up to the value of the other houses and you make good cash every time

Market value is more relevant than the condition of a home. You are no more likely to find an undervalued "fixer upper" than an undervalued home in good condition.

How you buy can make the most difference. Particularly in areas that are not yet hot, foreclosure auctions can produce amazing bargains in both market-ready and fixer-upper properties. This is certainly the best route if you are going to hire a contractor to deal with renovations, because your costs will include his profit margin.

The people best positioned to take advantage of fixer-uppers are contractors themselves. They are not neglecting their usual source of income while they do the work (which can be a significant hidden cost of DIY renovations and renovations you manage yourself) and they will pay less for labor and materials.

In addition, there are three mistakes people commonly make. They fail to recognize:

1. The difference between renovations and improvements. If you bring your home up to the standard of those around it, even if you pay "retail" for work and materials, you should recoup 90%+ of your cost. But anything you do to a higher standard can mean losing 30% or more of your outlay.

2. That there is (usually) a maximum price that a district can stand, regardless of the condition and amenities that a property offers.

3. That bland is best when it comes to preparing a property for sale.

If you can do it yourself then I would say renovate. Not everyone has the know-how to fix a home.