Even with the Denver Real Estate Market cooling slightly, many ask what type of house should I buy? Something more turn key? How about something that needs a little bit of work? Or, do I go all out and find a total fixer upper? That all depends! Let's take a look at each.
Turn Key
Buying something turn key saves you time and renovation costs! Not only do you have the luxury of living in a beautifully renovated home, but you didn't have to do the work. Also, if you are low on capital from your down payment and closing costs, you are essentially financing those renovations costs, that are already done for you, in the purchase price. On the flip side, turnkey means not being able to put your own stamp on your home. The work is done, therefore, there is no point to spend the money to change anything! Remember, you basically already paid for these costs in the purchase price of the home. Don't forget about HIGHER taxes. Higher the purchase price, you guessed it, the likelihood of higher property taxes. Lastly, if the market flips, there is no way to add “forced equity” back into your home, such as renovations.
Fixer Upper
Buying a fixer upper has several benefits, especially in today's market. As mentioned with turn key, you get to make the home your own! Finding the countertops you always wanted, and that new shower tile you've been eyeing at Home Depot, can all be customized to your liking. Buying a fixer upper at a lower than average market price means lower property taxes, and who doesn't love that. Lastly, renovations mean putting “forced equity” into your property. This can especially be beneficial if market prices were to ever drop. Losing equity from natural market conditions can and will happen at some point during your home ownership. Allowing you to counteract that with forced equity can ensure you aren't upside down on your loan, if you ever had to sell in a down market. On the flip side, renovations of course can be very expensive. Kitchens, bathrooms, electrical, plumbing, and the list goes on. Before you know it, you could be 10's of thousands of dollars into a renovation. Also, having the time to DIY it or hire contractors will all take time. It's important to understand if the juice is worth the squeeze.
Bottom Line
If you are willing to take it on, look for something in the middle. A home that will provide opportunities to make it your own, keep your property taxes lower, and still have opportunities to put in “forced equity” to protect you in a down market. All still ensuring each and every renovation provides a purpose to fatten your bottom line. Working with an investor friendly agent is the first step in this process.
