Fixer-Uppers in Santa Cruz County

By Terri Woods – Selling Real Estate in Santa Cruz, Aptos, Capitola, Watsonville, La Selva Beach and North Monterey County

So you want to buy a fixer upper in Santa Cruz County.

My first response is… WHY?

My experience has shown that there are really two type of Fixer-Upper buyers: Those that know what they are doing and First Time Home buyers.

If you are a first time homeowner, I really really advise against it. Many first time homeowners think it is an easy way to build equity. Though that may be true, it is also an easy way to divide the family. And sometimes, the split actually costs more than the improvements on the house.

If I had a nickel… (Well, maybe a $100 bill) every time I heard a First Time Home buyer mention that their “cousin” (or another family member) is an electrician (or plumber, or contractor)… I would be rich (kind of). Yes that is a bit of an exaggeration, but I have heard those comments regularly. I want to ask, “Has your cousin agreed to help you?” “Is the help free, or is he expecting $$?” “Is this going to be an evening or weekend project?”

In all homes, there are improvements that the new homeowner will want to make. Sometimes the simple things like painting, refinishing the floors, changing out light fixtures and door handles and faucets, can make a huge difference in the appearance and value of the home.

BUT, if you still want to buy a real Fixer-Upper, there are a few things to consider.

#1 – The cost to fix it up. What is the cost to fix it up? What is the purchase price you will pay? Would the cost to fix it PLUS the cost to purchase it be what other similar homes (that are not fixers) are selling for. It is not always wise to be the best home on the block. And you really don’t want to over-improve for the area. Make sure you figure in the permits, city codes, etc. and stay close to what the market price is for similar homes.

MY ADVICE: Get a couple of estimates of someone doing all the work for you. Then figure out what you realistically can do and what you want someone else to do. Hire pros. You can clean up, save up, but let the sheetrock pro do the sheetrock.

#2 – Have an inspection or get a contractor to look at the entire house. In any remodel or new construction, there are always surprises. Be prepared for those surprises. Foundation issues, roof problems. If you have young children, please make sure there is NO LEAD in the paint.

MY ADVICE: Figure 20% over what you think it will cost. Even if you cut corners, there are always surprises. Test the paint. Get a MOLD test too. Don’t skimp on the inspections.

#3 – Be prepared to be displaced for a while. Projects almost always take longer than originally planned.

MY ADVICE: Unless you are going to do this project full-time, a suggestion would be to have one part of the house that is livable PRIOR to starting the remodel. If that is an impossibility, consider borrowing a fifth wheel or small travel trailer and have it in your driveway so at the end of the day, you have a place to relax.

#4 – Make sure you have all your financing in order. Many fixer-uppers are never completed and end up… well, you don’t want to go there! Talk to your lender about the FHA 203(K) Program which is a long designed to help homeowners finance a Fixer-Upper. Depending on the age of the house, you might be able to get grants. Another thing is there are rebates for putting in energy efficient windows, solar panels, and other things. You might check into that as well.

My ADVICE: I am a “Pay as much as I can in cash” person. The things you can save on would be buying light fixtures and door handles when you see them on sale. When you must finance, find a great lender and see what other programs are available.