Watching home renovation shows on TV can be a great way to kill time. I should know as they’ve become my guilty pleasure in the past few years. But after watching episode after episode of homes being turned from run-down shacks into homes most of us only dream about, I began to wonder if it’s really as easy as these shows make it seem.
Before you embark on a fixer-upper journey of your own, here are a few things you need to know.
Problems Are Almost a Given for Fixer-Uppers
“Fixer-uppers are a mixed bag, and depending on how old the home is, that bag can be full of a lot of unpleasant surprises,” says Mark Scott, CEO of MARK IV Builders.
While TV shows often make it seem like it’s easy to fix up a home on a tight budget, that’s not always the case.
“Structural issues and other things can often throw a budget totally out of whack,” Scott said. “And if you picked a bargain remodeler, good luck getting them to finish a job that is out of their league. Many don’t have the gumption for challenging structural changes or problems that arise.”
Chip and Joanna Gaines, stars of HGTV’s show Fixer Upper, do deserve a little credit, as they’ve said on their show that they recommend home buyers have an extra $5,000 to $10,000 set aside in case problems arise during the project.
Another major consideration before you attempt to take on a fixer-upper is how much time it will take.
While most TV shows can overhaul a home in a one-hour episode, they don’t often talk about how much time it actually takes. A few shows will mention the time frame, often between 30 and 60 days, but this is not realistic for homeowners who attempt fixer-uppers in real life.
“Truthfully, you want a remodeler who will be honest about the time frame. You don’t want them to rush and hastily skip over details, but you also need them to commit and actively work toward a fixed completion date,” Scott said.
In reality, a fixer-upper project can take months or even a year to complete. During that time, you may or may not be able to live in the house. This can leave you with limited living space if you are able to stay in the house. In the worst-case scenario, you may be paying a mortgage on the fixer-upper and paying rent or a second mortgage while you live off-site.
Personally, when I committed to buying a home that was under construction a few years ago, I ran into this very issue. The project was supposed to be completed by June 1 and ended up not being done until mid-October.
Financing a Fixer-Upper Is Complicated
Finally, financing a fixer-upper is much more complicated and complex than getting a mortgage on a home that’s not in need of major repairs and updates.
Most lenders aren’t going to finance a fixer-upper with a traditional mortgage. After all, they aren’t going to approve a loan for more than the home’s current value.
Turning to a home equity loan won’t work either since you won’t have any equity built up on a new purchase.
This is where other solutions need to be considered, like an FHA 203(k) loan (Quicken Loans doesn’t offer this type of financing) or a personal loan in order to purchase the home. Once the home is in qualifying condition, you could always refinance into a traditional mortgage.
The bottom line is, if you decide to go ahead with a fixer-upper, be prepared for any situation you can think of. The truth is, taking on a fixer-upper is not as easy as it seems on TV.
Have you purchased a fixer-upper? What were some of the challenges you faced, and did it match the experiences you’ve seen on TV? Let us know in the comments below!
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