Tips for Buying a Fixer-Upper in Los Angeles

The Los Angeles housing market is experiencing a shortage of listings. From multi-million dollar mansions in Brentwood to fixer-uppers in North Hollywood, sellers are offloading their coveted LA real estate and closing deals within days of putting them up for sale. 

While many buyers desire move-in-ready, state-of-the-art homes, handy homeowners and investors flush with cash are always looking for opportunities to purchase a fixer-upper in the Greater Los Angeles region. 

But like any investment, buyers must consider their options when deciding between buying a recently renovated single family home in Pacific Palisades or a divided fixer-upper duplex with separate entrances near Sunset Boulevard in Silver Lake. 

Below we highlight a few tips on how to approach buying a fixer upper in LA.

What is a fixer-upper? 

Fixer-uppers are older properties or houses in disrepair and require extensive remodeling or repair work, which is why sellers list the prices below the market average. Handy homeowners or buyers with pockets deep enough to cover repairs rejoice when they see a deal for a fixer-upper, as these homes in Los Angeles can be remodeled to create your dream home.

While these worn-in homes originally served to give home buyers an entry step onto the property ladder, fixer-upper homes are now hot investments for developers. Fix-and-flip contractors will fix the glaring issues of a property, then flip it to buyers seeking a freshly remodeled, move-in ready home. 

While TV shows like Fixer Upper and This Old House have popularized the fix and flip industry, fixer-uppers are foundational parts of the LA real estate market, as they provide a means for new homeowners to enter the property ladder at a lower cost. 

The pros and cons of buying a fixer-upper in Los Angeles 

While renting provides an opportunity to live down by the Venice beaches one year and the hills of Burbank the next year, the money spent on rent will never return to your wallet. 

Not all buyers can afford to purchase move-in ready homes. But homeowners aspiring to own a fixer-upper can still find opportunities to get on the property ladder in areas like East LA, South LA, Sherman Oaks, and North Redondo Beach.

Beyond providing a gateway to homeownership, fixer-upper homes allow buyers to customize their own homes without breaking the bank to build a new home from scratch. Depending on the cash a buyer has on hand or their contracting skills, a fixer-upper home will grow in value with each renovation project or new addition. 

While it is fun to plan out and construct the home of your dreams, buyers will need cash on hand or a line of credit to finance the remodeling of a fixer-upper in LA. Also, if a property is a full gut renovation, owners might now be able to live on-site, and buyers must consider where they will live while the property is under construction.

Fixing up an investment that lasts a lifetime 

Whether you are a seasoned buyer adding another property to your portfolio or you are a first-time buyer taking your initial step on the property ladder, fixer-uppers in LA provide a solid potential return on investment. 

Wealthy buyers seeking an investment property for rentals can scour neighborhoods like Central Los Angeles that border trendier neighborhoods for distressed properties. These fixer-uppers are a cheaper alternative to buying a freshly remodeled home bordering the Downtown area, so long as they have the cash to cover the renovations.

Handy first-time home buyers closing on a run-down home gain entrance to the property ladder, and if they buy the right property, they can make their investment pay for itself. Savvy buyers acquiring a multi family home can pay off the mortgage and remodeling costs by renting out half of their Echo Park duplex they just renovated. 

Plus, so long as the market remains strong, a remodeled fixer-upper  provides much-needed equity if a buyer wants to refinance or sell the home. That is a lot of value unlocked for first-time buyers, but these benefits have drawn professional developers, investors, and contractors into the fixer-upper market. 

These institutional buyers have a leg up, and retail buyers scouring listings for that ideal Mid City home near the Crenshaw/LAX transit line should consider working with an agent to level the playing field. 

Find more fixer-uppers in Los Angeles by working with a buyer’s agent

The competition to purchase a fixer-upper is tight in the Greater Los Angeles region. But aspiring homeowners can find more ownership opportunities by working with a buyer’s agent experienced in selling beleaguered LA homes.

Buyer’s agents in LA can leverage their local neighborhood knowledge and help first-time buyers and wealth investors find a niche in LA suiting their housing needs.

Additionally, buyers should seek brokerages like Prevu that offer commission rebates back to the buyer after making a purchase. Beyond offering an array of digital tools to buy a home online, Prevu’s Smart Buyer Rebate gives new homeowners up to 1% of their purchase price back to them to use for renovations or other costs. 

Prevu Real Estate, Inc. is a licensed real estate broker in California, license number 02134758.