For those that have gone through San Diego real estate listings and have seen homes for sale that are way out of their price range, the idea of buying a fixer-upper may be an appealing option. The San Diego housing market has made it difficult for those of modest means to compete with other home buyers. The problem is that there simply aren’t enough homes for sale to meet the demand of interested buyers. Meanwhile, construction of new homes has lagged behind the growing demand.
But the question of buying a fixer-upper, is largely one of incurring added costs beyond the mortgage price. While it definitely means there will be less competition for the property, it also carries hidden costs in renovation, and a lot of risk. Unless you run a company that buys run down properties and fixes them up for resale, you may find yourself being very wary of the prospect of investing in such a property.
When a Fixer-Upper is a Good Idea
Generally speaking, those that find themselves being priced out of the home market, are still going to find themselves scraping pennies together in order to manage a fixer-upper. The folks that will find a fixer-upper a worthy investment, are those that are selling off an older property, or have the capital on hand to renovate the property themselves. For these folks, it’s really a matter of building their dream house out of the skeleton of a property that wasn’t well cared for by previous owners.
When a Fixer-Upper is a Bad Idea
If you’re struggling to find a home in your price range, then fixer-uppers are generally a bad idea. The problem is you’re not going to necessarily know how much fixing up you’re going to have to do. On top of that, fixer-uppers, generally list for around 8% lower than the market value.
If you feel like you’re being priced out the market, and can have someone you trust look at the property value with you, you may be able to estimate precisely how much the renovations will cost, what needs to be done immediately, and what can wait. If you’re patient, this can turn into a lucrative option, as San Diego real estate has showed no signs of slowing the steady increase in value we’ve seen over the past few years.
It helps to have enough money set aside, and an actionable budget on which to make your decision, but going into the purchase of the home blind is the stuff that nightmares are made of.
That being said, a fixer-upper can be a good choice in a tough market for San Diego buyers looking for a new home.