When considering purchasing a home, a fixer upper may be tempting. The low price can look attractive but it usually reflects the condition of the home. Here are a few things to think about before buying a fixer upper.
Evaluate The Condition
Obviously a fixer upper will need work, but how much work is the question you should be asking. You need to separate cosmetic problems from structural problems.
Location, Location, Location
Location is important as this determines if your home will appreciate or depreciate in value. Is the neighborhood safe? What have property values been like over the last 10 years? An agent can advise you on factors that can have positive and negative effects on your homes resale value.
Get An Appraisal
If you are financing through a bank this is a requirement, but if you are paying for your fixer upper with cash it is still best to have it appraised. An appraiser can tell you the current value of the home and also estimate the cost of repairs needed to bring the home up to a livable standard.
DIY or Hiring a Contractor?
If you are skilled enough to do some of the work on your own, this can help bring the cost of renovations down. Being able to DIY could help you save big. It can also cost you more money if you do not know what you are doing.
Think about how much time and skill you really have to dedicate to the renovations. Leave anything you are unsure about to a professional.
Before you close on a fixer upper, get estimates for obvious repairs. You won’t know the real cost of ownership until you have an idea of how much you need to spend on repairs.
Have The Home Inspected
By hiring an inspector, you get a better idea of what you are getting yourself into. You may be able to see obvious issues, but an inspector can you tell you if your walls are structurally sound or if you need a new roof.
Add Some Cushion
After you’ve done all of the above and decide to go ahead. Make sure you add between 5% – 10% cushion to cover your anticipated costs. This is critical in making sure you are able to afford the renovations. Surprises can pop up during the process of repairs, it is essential to account for these. It’s better to plan for it to be more expensive and have more left over than to underestimate your project and go over budget.
Expect The Unexpected
Things can go wrong, you should expect and prepare for setbacks. Things may not work the way they are supposed to or a project may take far more time that you planned.
Yes, a fixer upper can save you money. Just make sure that you are making an informed decision before taking the plunge. Consider your finances and to what extent you can dedicate the time and money to a fixer upper. You should set realistic expectations about what you can accomplish based on your time and budgetary constraints.
Have you purchased a Fixer Upper? Let us know in the comments what your process was like and what helped you get the best value for your money. What other ideas can you add to this list that I may have not mentioned?