Flipped vs. a fixer upper—which is better to buy?

Flipped-vs.-a-fixer-upper

As the housing market continues to recover, the number of options available for home buyers continues to increase. Home flipping continues to grow in popularity and it’s possible that you might be looking at buying one without even knowing it. Is this good? Is it better to buy a fixer upper or one that has already been fixed? Adam Gallegos, a real estate agent for Arbour Realty, an Arlington-based firm, had some advice on the topic.

A reader wrote in, asking, “My husband and I are soon going to be in the market for a single family home . . . we were wondering if you can advise on the pros and cons of buying a flip versus buying a smaller, cheaper home and commissioning the renovations ourselves.”

Commissioning renovations returns more on your investment

Gallegos’s first response was, “In most cases, you are going to get more for your money by purchasing a smaller, cheaper home and commissioning the renovations.” This, he said, is because if someone flips a home, on top of the price of the renovations they make they’re going to add a premium to the house price.

Make your own design choices

Buying a home you plan on fixing yourself also comes with the benefit that you get to make all the design choices, rather than settling with whatever the home flippers thought would make an attractive home. You might be able to choose patterns or materials that you like better at a lower cost. Plus, there’s a certain amount of pride you can take in a finished product, increasing your love for your home because you’ve made it just the way you like it. Gallegos also said, “If you make tasteful choices and manage your costs carefully, you could create some nice equity for yourself by the time you are done renovating.”

Home renovation drawbacks

However, there are challenges attendant in being the ones to make the renovations. For one, you must make the effort to find the right contractors, figure out if there are any structural issues you need to worry about, and then live in the home while it’s being renovated. Even a simple bathroom renovation can put strain on the best of relationships, and if the home needs to be totally gutted, you may find yourself in over your head.

It’s best to choose the do-it-yourself renovation route only if you have some prior knowledge of home design or construction. That way you can make appropriate cost analysis when you look at a home, estimating how much each renovation project might cost.

Picking out a previous flipper

Previously flipped homes may not be immediately apparent, especially if you’re working on your own, rather than through a real estate agent. However, Zillow.com allows you to look up the purchase history for a house, how much it was sold for, how long it’s been on the market, etc. If you find a home that was sold just 6 months ago and is not back on the market for a significantly higher price, you can probably assume the house has been flipped.

 

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Source: arlnow.com/2014/07/22/ask-adam-buying-a-flip-versus-renovation/

 

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