How to Maximize the Potential in a Fixer Upper Home

With today’s market, finding a home within your price range that checks all of your boxes can feel difficult. Buying a fixer upper home and renovating to suit your wants and needs is a great option. But how do you know if a fixer upper has potential and worth the work?

Buying a fixer upper isn’t always easy, but there are some benefits that might inspire you to take on the project.

In 2022, the National Association of REALTORS (NAR) released a Remodeling Impact Report with help from the National Association of the Remodeling Industry (NARI) to share with homeowners the best renovation options for increasing value and joy in their homes. This report includes the reasons a homeowner remodels, the outcome of various remodeling projects, and the level of happiness post-completion of a project. There is also an estimated cost and cost recovery for the majority of the remodels. All estimations are based on a 2,495 square foot house built after 1981 with no hidden issues. Projects and materials are standard or typical quality. All information in this blog comes from this report.

The Benefits of Buying a Fixer Upper

Buying a fixer upper can allow you to save money, add custom additions and finishes, and avoid competition. 

Save Money Up Front

Buying a fixer upper most-often comes with a lower purchase price. But before you buy, be sure to consider the total price of renovations for your new property. (We’ll talk about that more later.)

Customize Your Home

When you buy a fixer upper, you can easily customize it to make it right for you. Want to tear down that wall? Do it! Thinking about replacing all of the flooring? Go for it! The possibilities are endless and because you paid a lower sticker price, you can justify spending more on the aspects you want.

There is Less Competition

Homes with minimal maintenance needs are more likely to sell quickly and with lots of competition. Many prospective buyers don’t have the time or effort to make a fixer upper feel like home. In 2020, only 43% of Americans said they would take on a fixer upper. If you’re looking for one, though, you’re in luck. Homes in need of a lot of TLC are less likely to be competitive amongst buyers. You can take your time with your decision, make offers, and generally have a more peaceful state of mind.

How to See the Potential in a Fixer Upper

Buying a fixer upper can be tricky. Sometimes, there can be underlying issues with the home that aren’t initially visible. That’s why it’s important to have a critical eye and purchase fixer uppers that have potential. How do you know what to look for?

It’s in a Good Neighborhood

The houses surrounding a fixer upper are telling. If the houses populating the neighborhood are in good condition, it’s likely that your fixer upper has strong bones.

It’s Outdated but has a Solid Floor Plan

When you see the fixer upper for the first time, can you picture yourself in the space? With a new coat of paint and a flooring refresh, would this home fit your needs? If you like the layout of a home and it just needs a few updates, it might be the one for you!

It Passes Inspection

Before you buy any home, you should get it inspected. Inspections ensure your safety and give you an idea of the renovations you will need to make. If a home completely passes inspection or only misses a few marks, it is likely manageable. If it is a safety hazard, consider finding a different fixer upper home.

Renovations that Give You a 100+% Return-on-Investment

When it’s time to sell, a fixer upper’s resale value is often higher than the initial purchase price and the cost of renovations combined. Making high-quality renovations can often pay off in the long run.

The National Association of Realtors (NAR) and the National Association of the Remodeling Industry (NARI) put together a Remodeling Impact Report to assess the ROI and level of joy of various remodeling projects. Out of the different projects they analyzed, five gave homeowners a 100+ percent return-on-investment. 

1. Refinish Hardwood Flooring

According to the Remodeling Impact Report, homeowners most often completed a hardwood flooring refinish to upgrade worn-out surfaces and improve their overall livability. After completing the project, 100% of homeowners said they had a greater desire to be at home.

NARI Remodelers estimate that this project costs $3,400, and REALTORS predict $5,000 to be recovered, giving you a 147% return on your investment.

2. Install New Wood Flooring

Looking to install all-new flooring instead? This project costs approximately $5,500, with about $6,500 as an estimated recovery. This gives you a 118 percent return on investment. Plus, 77% of homeowners who completed this project have an increased sense of enjoyment when they are home.

3. Upgrade Insulation

Upgrading your insulation has multiple benefits. Save energy by preserving heat and air conditioning during different seasons while making sure you’re comfortable. 62% of people who completed this project have an increased sense of enjoyment while at home.

This project gives a 100% ROI, the estimated cost and recovery being about $2,500. 

4. New Roofing 

Homes might need new roofing for a multitude of reasons. It’s old, it weathered a severe storm, it’s leaking, etc. Upgrading a worn-out roof allows you to live more comfortably and increases your home’s curb appeal. NARI estimates this project to cost $12,000, and REALTORS predict the same amount to be recovered, giving you a 100% return-on-investment.

5. Upgrade Garage Door

Getting a new garage door is an easy project that will increase your curb appeal. With an estimated 100% ROI, this project costs about $2,000. 

You may think a garage door doesn’t have much impact, but 80% of homeowners who installed a new garage door have a greater desire to be home since completing the project.

Buying a fixer upper home can seem daunting, but with the right property that has good bones, you will be living in your desired home in no time. With a solid foundation in a good neighborhood, you can prioritize remodels that will give you a 100% or more return on your investment. The work will pay off when you end up with a home you love that suits your needs and style.