There are a lot of things to be said about taking a house that was once a beautiful home and restoring it to its former glory. Being able to step back and look at what a little sweat and a lot of hours can do to breathe new life into an older home is many a homeowner’s dream. For others that dream may only entail trying to figure out the best place to hang the family photos. If you’re torn between these two homeowner dreams, here are five key considerations you need to make before signing the dotted lines for that fixer-upper or that sparkling castle.
First, think about your budget. While most of us are not in the position to buy a house of any size small or large out right, the mortgage on a home a fixer-upper pales (generally) in comparison with a new home. For some, the mortgage of a fixer-upper may be the only viable option, saving them several hundred dollars a month. This flexibility allows them the ability to remodel portions when finances become available. Even for those that have the option of choosing between buying new and remodeling, the ability to have this flexibility can result in a better financial stability. Remodeling as you go gives you the room in your budget to live in your house, comfortably, and fix it as you wish. As you might have assumed different projects cost more than others and it can take time to get a good return on your remodeling projects.
Along with knowing your budget, know your expertise or, more to the point, your inabilities. The more you are capable of doing yourself (properly), the easier and more budget-friendly a remodeled home can become. Just think about the 1986 Tom Hanks movie The Money Pit, about a couple who find their dream home in a stately fixer-upper. However, neither Tom Hanks character nor his significant other Shelly Long has the capability to do any of the repairs and therefore must contract out all the work. What transpires is a hilarious, 90 minute PSA on knowing what you’re getting yourself into when you buy a fixer-upper. The more work you can do yourself, the more money you can save.
Next, consider the scope of work. Sure that house that needs remodeling has your eye, but if what it really needs is to be gutted down to the studs and rebuilt is it truly worth it? There is no right or wrong answer. But, for some, drawing the plans or buying plans that mimic the layout of that older home and building it new is the most sensible avenue. You end up with the house you envisioned while not waiting months to tear it down only to build it up. On the other hand, if the only thing the house needs is a new kitchen and paint to start then it may make much more sense to buy the fixer-upper and go at it a little at a time.
The scope of work coincides with the next consideration, your time frame. In some situations, such as job relocation, home sales, or rental changes, it may be necessary to move into a house right away. In that case the only option left to you is to buy a new home. However, for the majority of interested home buyers, time frame generally boils down to tolerance. A home in need of remodeling may take years to complete, especially if you are on a tight budget. This elongated time frame often alters dreams into ‘good enoughs’, and homeowners often settle for what they can stand.
Finally, if you do decide to buy a home in need of remodeling be prepared for the unexpected. Especially in older homes, small projects often become very big ones. For example, I purchased an older home recently and while installing ceiling fans learned that most of the house was run on the archaic ‘knob and tube’ electrical system (a system used as late as the 1950s). This lead me, with the help of an electrician, to rewire nearly 80% of the house, for what started out as two ceiling fans.
While I had anticipated doing this anyway, sometimes there are things you can’t anticipate. For example, I had a friend who while replacing the drywall in a room of his house found that the previous owner used scrap lumber, some of which was pieced together to form full length studs, and a brother-in-law that found a buried horse underneath what was to be his new kitchen in a home built in the late 1800s. While, you may never come across anything as extreme you will no doubt run into a few headaches along the way.
In the end deciding between remodeling and buying new depends on knowing yourself, what you can afford, what you can do yourself, and what you can put up with in the meantime. For more information and ideas consider reading: building a cheap house and construction codes and standards.
Remodeling Cost vs. Value at Remodeling Magazine.
Construction Codes & Standards, National Association of Home Builders.