#1 Evaluate the PriceIf it’s a fixer-upper, it should come at a fixer-upper price. Duh, but that’s a reminder NOT to fall in love too quickly with a home with a listing that says, “Just needs a little TLC.” Do your homework first and, if the price is right, fall in love. Find out what similar homes in the neighborhood sell for and how tricked out they are (with amenities and materials). A REALTOR® can help you figure that out. And that will tell you how much money you can invest in the home before you over improve for the neighborhood, a mistake you want to avoid if you plan to sell in the future. Wendell De Guzman, a Chicago real estate investor who renovates at least two houses a month, recommends treating the remodel like a business, not a hobby. Determine your budget based on the market value of homes in your neighborhood, because you’re not going to sell for more. “It doesn’t matter how much money you can put into the house,” De Guzman says. “You’re limited by the market value of what nearby houses are selling for.”
#2 Start Evaluating What Improvements Are NeededSome can be as simple as painting or landscaping, which you can accomplish with sweat equity, De Guzman says. In fact, the Pollinas started their rehab with high-value, low-effort landscaping, since it’s the first thing people see. They raked, brought the grass back to life, planted fruit trees and a veggie garden, and enjoyed the reaction: “People are so surprised and impressed,” Alessandra says. Other tasks — the Pollinas focused on the kitchen next — may require the work of professionals and cash to pay them. It’s those projects you want to carefully evaluate against the home’s price.
#3 Which Hire-a-Pro Projects Add Instant Equity?Fact: While most home improvements add some equity, some consistently top the list. Another thing those equity champions have in common: They usually require a pro’s help, but the cost can be instantly worth it. Based on data gleaned from the “Remodeling Impact Report” from the National Association of REALTORS®’, if these three projects are on your fixer-upper’s list of must-haves, you may have found your dream equity-builder:
- A new roof may not be the remodeling project of your dreams — until you realize it could actually pay you. You’ll spend about $7,500 to install it (based on a national average determined by contractors responding to the remodeling impact survey), but when you sell, it could recoup 109% of that, or $8,150, according to REALTORS® surveyed.
Hardwood floors: To refinish hardwood floors costs about $3,000 on average nationally. The survey indicates you could recoup 100% of that at resale. If you’re looking at a fixer-upper (at the right price) that needs the floors redone, that’s like getting the floors for free! New hardwood floors are also a good choice at a cost of about $5,500 to install, and could recoup $5,000 of that at resale.
- : A fixer-upper offers a great opportunity to replace or add insulation. New insulation costs about $2,100 on average nationally, and can recoup $1,600 at resale — as if saving 10% to 50% on your energy bill wasn’t compelling enough.
#4 Evaluate Your Ability to Deal with DisruptionWhether you’re a DIY Jedi or content to let the pros handle the remodel, if your patience is shorter than your potential home’s to-do list, a fixer-upper may not be a good choice. Renovating a bathroom alone can take two to three weeks. Add hardwood flooring, a new kitchen, and siding, and you’re looking at a whole summer’s worth of rehab. When considering a fixer-upper, evaluate the limits of your emotional energy as well. Inevitable project pitfalls and delays can be wearing. Only if you have the time, patience, and emotional endurance for a fixer-upper will it be a good fit for you. And only you can determine that. But if you can budget your time and money — and employ the right fixer-upper strategies — you might find yourself with a double reward: a home that’s worth far more than you paid and the joy of knowing you helped get it there.
Linda Secrist & Associates is the top selling team in luxury homes in the SLC Market. They have received countless awards over the past 20 years, including “Sales Team of The Year” for over 10 years including 2019! Linda Secrist is #54 in the top 100 Agents in the World in luxury residential real estate. If you’re searching for homes in Sandy, Salt Lake, Cottonwood Heights, Millcreek, Draper, South Jordan, Bountiful, Centerville, Farmington or anywhere in northern Utah, Linda Secrist & Associates are the real estate agents to call. If you’re buying or selling a home, don’t hesitate to text or call us at 801-455-9999!