When you find a house with good “bones” at a great price the possibilities seem endless. You can design the perfect home and earn money when you resell – a win-win. Unfortunately, it’s not quite so simple. A fixer-upper can turn into a money pit if you’re not careful.
A perfect fixer-upper in a less than desirable neighborhood is a risky investment. Adding state of the art appliances, granite counter-tops, and marble floors won’t make up for a location that buyers just don’t like.
Choose an area that has easy access to attractions, jobs, schools, and transportation. And look for neighborhoods where surrounding houses match the quality you envision for your fixer-upper after it’s remodeled.
Beware of hype that often surrounds “up-and-coming” neighborhoods. Make sure there are facts to support a claim that an area will be booming in the next few years, including plans for new development, jobs, or public transportation.
Renovations don’t happen overnight. The work is stressful and time-consuming. You may not be able to cook in your home or even fully move in until the remodel is complete. An interruption in your daily routine can take a toll on the entire family.
Think about your time and patience. If you don’t have time to spare, stick to a home that needs simple cosmetic work like fixture, wall color or carpet changes. Only consider a home that needs extensive remodeling if you have time and patience to devote to the project.
A hundred dollars here and there will turn into thousands if you don’t take control of your budget. Get estimates from contractors to find out how much work will cost before buying the fixer-upper. Think about the repairs you want to DIY as well and price out materials for the job. Then come up with a budget to hold yourself accountable throughout the remodel.
If you plan to finance renovations, shop for rates early on. We offer loans for construction and renovation. Partner with us to create a loan product that suits your needs.
The inspection contingency of a contract is your ticket out of a deal if there’s a problem during the inspection that impacts your decision to buy. Use this contingency to your advantage. Bring in a certified home inspector and other specialty inspectors when you find a fixer-upper.
A home inspector is a generalist. Specialty professionals have an area of expertise, so they can pick up on problems a generalist could miss. You may want to hire a specialist to take a look at the roof, foundation or sewer. And to look for lead paint, asbestos, and invasive pests.
Extra inspections will cost you more money. But, it’s better to find problems early on instead of later down the road when you’re stuck with the house.
