What to Look for in Homes That Need Renovation — and What to Avoid

Whether you are looking for a potential forever home or are in the house flipping business, identifying properties that need renovation is one of the best ways to achieve value in the real estate world.

Find a home that is significantly underpriced. Put a little money into fixing it up. Watch the value soar.

If only it were that simple.

While it is true that renovation properties can have some tremendous upside, there are some that inevitably turn into money pits. To help you identify “fixer-uppers” with true potential, keep reading as we explore some features to covet and a few red flags when shopping for renovation properties. 

Covet Insulation

The importance of energy efficiency is no secret at this point. The real estate sector has to be part of the solution in slowing the effects of climate change.

With that said, any energy-efficient features you look to install (solar panels, low-E windows, smart thermostats, etc.) will face an uphill battle without a sustainable insulation infrastructure. If the R-value of the building envelope is insufficient, the walls will be a turnstile for energy transfer.

Modern properties are looking for upgrades over basic fiberglass or cellulose options. Hemp, sheep’s wool, and recycled denim are great mindfully-sourced options. Rigid polyiso board has a premier R-value per inch, making it compatible with any framing and cladding type. Mineral wool has some of the best fire resistance properties--a leading consideration in California markets susceptible to wildfires. 

Avoid Major Structural Issues

There are some properties that seem like all they need is a little landscaping and a fresh coat of paint--until you look closely. Small gaps between exterior windows and walls, diagonal cracks along the drywall, and a leaning chimney are just a few symptoms of a home that has serious foundation and/or framing issues. Damage to these key structural components will often require such extensive renovation that generating a profit from a flip will be next to impossible.

If you do want to tackle a project that requires significant foundation or framing work, it is crucial to preempt the issues that were causing the damage in the first place. Moisture is a prime culprit. Use the highest quality gutters and drip edge flashing to keep precipitation away from the building envelope. Ensure that the soil is graded to prevent runoff from trickling back toward the home. Add permeable membranes for a waterproof basement. Install slot drains in the landscaping for additional runoff control. 

Covet Solar-Friendly Roofing

Everyone in the Bay Area is familiar with Title 24--the California solar mandate. It requires that all new construction homes be equipped with solar PV systems.

While renovation projects do not specifically fall under this umbrella, it would be foolish to not conform with this movement. There will come a point when solar is an expectation in all properties, so look for renovation prospects that have solar-friendly roofing already in place. Metal roofs and composite roof tiles are some of the best options thanks to their durability and mounting-friendliness. Concrete, clay, and wood roofs are some of the most problematic, as they can readily crack when installing mounting hardware. 

Avoid Closed Floor Plans

It is tough to find a buyer who says they prefer a closed floor plan home. That is a trend squarely left in the previous millennium. Modern open floor plan homes are so much brighter and versatile, sparking the imaginations of a wide demographic of buyers.

Therefore, if you are looking at an older property that still features a closed floor plan, understand that there will be quite a bit of work required to open it up. At the least, expect to have to knock down a couple of walls, redefine some pre-existing rooms, and install a kitchen island. 

Covet Functional Exteriors

Functional exteriors are a top priority in modern homes. They are crucial for the health and lifestyle of remote professionals and other homeowners needing an escape from the daily four walls.

The trouble when looking at exterior renovations is that they commonly fall victim to scope creep. What starts as a small “landscaping” project can quickly turn into a behemoth. 

Therefore, look into renovation properties that already have a strong exterior layout in place. Look at covered outdoor hangouts that use top-quality patio flooring. Assess the condition of the fencing system and pay close attention to the fence gates. Determine if there are some good low-water landscaping and/or hardscaping features that will reduce the need for ongoing exterior maintenance. 

Avoid Outdated Utilities

In addition to causing a shock each time the bills roll around, outdated utilities in a home can present a threat to occupant health and safety. Old-fashioned galvanized pipes can corrode and release byproducts into the water. Outdated circuits are at high-risk of being overloaded by modern energy demands, increasing the threat of a house fire. Older HVAC units and boiler furnaces can create uneven heating and cooling in the home, triggering non-stop energy usage. 

In each of these cases, upgrading to more contemporary options can be time consuming and expensive, often requiring a full scale makeover of most of the house. 

Make Smart Choices When Identifying Properties to Renovate

While renovation properties can have great upside, the downside is equally real without proper consideration. By taking the aforementioned tips to heart, you give yourself the best chance to increase value when taking on a renovation project.

For the latest real estate market trends in the Bay Area, explore additional market insights on our Market Update Blog Page. 

Explore More Home Renovation & Real Estate Value-Add Tips

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