A fixer-upper - generally defined as a property on the market in need of repairs and maintenance - often presents a good deal on price. "Fixer-uppers are generally where you find the property bargains, and if you see past the problems and focus on the potential, it may just be your lucky day," Silvana Dos Reis Marques, Manager at Leapfrog Pretoria East, says.
She adds though that there are a number of factors to consider when buying a fixer-upper:
Location location location
The holy grail when it comes to property, location is even more important when it comes to buying a fixer upper. "Go for a fixer-upper in a desirable, well-maintained area. In other words, opt for the worst property in the best area, rather than the best property in the worst area," Dos Reis Marques advises. You can do almost everything about improving a property but you can do almost nothing about the area in which it is located.
Make sure the configuration of the property works for you. Renovation costs start skyrocketing when you change the layout of the property. "Removing a wall here or there to open the space up more or adding an enclosed patio to create a sense of indoor/outdoor living is also less involved than adding a bedroom or moving the kitchen from the front of the house to the back of the house, for example," Dos Reis Marques explains.
Get your hands dirty
The appeal of a fixer-upper is typically that it needs some TLC, as opposed to a complete rebuild. "One of the easiest ways to manage the costs is to get involved yourself. If you're so inclined you could tackle things like the painting yourself, or recruit a builder or handyman who is willing to take on smaller jobs at a reasonable rate," Dos Reis Marques advises. Make sure to ask for references and commit to still managing the project yourself to ensure the desired outcome.
Once you've signed on the dotted line for the fixer-upper it can become very overwhelming to start turning the house into a home. "A good place to start is to draw up a list that distinguishes between the structural and foundational changes, and the cosmetic and nice-to-have changes, as this will make it easier to manage and to allocate your resources accordingly," Dos Reis Marques says.
Changes that fall into the "structural/foundational" category include:
Cosmetic changes are usually things like:
Don't underestimate what a big difference even just a coat of paint can make to the interior and exterior of the property.
Investing in a fixer upper is all about recognising potential, but realising that potential is always going to cost money.
"The idea is that a fixer-upper is a bargain so the theory goes that you'll have money available to make the necessary changes. For most buyers cash is a problem so you could consider registering a bigger bond and accessing that capital to pay for the fixes," Dos Reis Marques suggests.
It is also useful to draw up a budget for how much you want to spend, where the goal is to plan it so that you get the most value for money. "Discussing your proposed plans with a trusted property advisor is one way to ensure that you don't overcapitalise on the property, but that it would fetch a relative price on the market," Dos Reis Marques says.
Make sure the fixer-upper actually has potential. "There's a difference between fixing a property and spending the rest of your life and all your money on trying to make it a suitable home," Dos Reis Marques believes. But if you go into it with an open mind and a dynamic plan, it may be one of the best investment decisions you'll ever make.