In March of 2022, a bored 23-year-old impulse-shopped on Zillow and accidentally bought a house. It was me. I was the bored 23-year-old. I wanted to buy a house, and I had all my finances in order… I just wasn’t prepared to pull the trigger on a fixer-upper sight unseen.
The object of my misguided ambition: a 1923 craftsman bungalow nestled in Casper, Wyoming. Little did I know then that this quaint bungalow would teach me invaluable lessons about real estate and the world of fixer-uppers.
I want to share what I’ve learned. All you need to do is buckle down for this blog post. I had to renovate an entire house. The least you can do is participate.
1. It Has To Be Your Primary Residence For Two Years
If you’re eyeing the sale of your fixer-upper down the line and wish to dodge capital gains taxes, here’s a crucial little nuggy of wisdom: it must serve as your primary residence for at least two years. By meeting this requirement, you can qualify for a capital gains tax exemption of up to $250,000 on the sale of your primary residence.
My journey took an unexpected twist at the 18-month mark of owning our Wyoming fixer-upper. I activated my Colorado real estate license and started marketing full-time for my brokerage in Colorado. I found (and, at the time of writing, still find) myself facing the challenge of spending more time in Wyoming than in Colorado. This means countless hours on the road, an increase in remote work, and numerous weekend trips to stay within the confines of my construction zone. The question echoes: “Are fixer-upper houses worth it?”
2. You Might Want to Look at a Mid-Sized Market
The advantages of exploring real estate opportunities in mid-sized markets cannot be overstated. Casper, Wyoming, where we embarked on our fixer-upper journey, and the Western Colorado region where I currently work, offer distinctive appeal. They provide fertile ground for finding fixer-upper homes ripe with potential. It’s not just about the house; it’s also about where to buy fixer-upper homes.
3. A Standard Home Inspection Might Not Reveal Everything
For any prospective fixer-upper buyer, a comprehensive home inspection is non-negotiable. However, it’s essential to understand that even the most thorough inspection might not unveil every hidden issue. This is the fine line between choosing a fixer-upper or a move-in-ready home. You can request special inspections to evaluate your structure, sewer, electric, and other major systems before you buy! Or you can have an optimistic attitude and embrace the unexpected surprises as part of the adventure.
4. Profitability Depends on Your Renovation Timeline
The profitability of your fixer-upper venture hinges on several factors, one of which is your renovation timeline. This aspect becomes particularly critical when dealing with a real estate market that’s appreciating rapidly. If you literally want to fix and flip your house, the value you add through renovations and market appreciation play a pivotal role in your overall profitability.
5. You’ll Need a Variety of Contractor Skills
To save on renovation costs, you’ll likely have to roll up your sleeves and get your hands dirty. While consulting with professionals is a smart move, you’ll also need to tackle a variety of tasks yourself. For instance, we had to reinforce the foundation on one corner of our home. We chose to take on the demolition work and clean up, leaving the more complex tasks to the contractor. This flexible approach can significantly cut costs (and simultaneously made us really tired and grumpy).
Do You Want a Fixer-Upper?
If you’ve been nurturing a desire to dive into Western Colorado real estate (or wherever else), a fixer-upper house might be your calling. It’s a challenging and rewarding journey, but it provides a canvas to paint your vision. If you’re curious about my experiences or eager to explore homes for sale in Western Colorado, don’t hesitate to reach out. The world of fixer-uppers beckons, and your adventure could be just around the corner.