By Melissa Dorman, March 4, 2019
By Melissa Dorman, March 4, 2019
The best fixer-upper may be the home that everybody will want to have in the future, but also which nobody wants right now due to its present condition.
So buying a fixer-upper can be a good way to own a home for self or for reselling it after improvement.
Since repairs require you to use cash, it is very important to be vigilant or else one may end up either with buying the wrong property or spending too much on the renovations.
The location and neighborhood is a very crucial factor to be considered before zeroing in to the fixer-upper home.
The home located in a sought after neighborhood can be a valuable investment for the buyer once the repairs are carried out.
A good motto: “ Buy the worst house on the best block”.
Most important thing is to be in Love with the area and then to do a little bit of research to see what it has going for it in terms of schools, desirable restaurants, walkability etc.
Look into nearby facilities like Hospitals, Schools, Markets, Parks, and the availability of good public transport.
Once you are fully satisfied that you are getting all the essential facilities in the area, then only should you zero in to the exact fixer upper home.
Next thing to consider after the locality is if the layout and the interior specification is of your liking and whether the potential buyers will also like it.
There are more chances to attract buyers if the home has more bedrooms than any other homes in the locality.
Does the home have an open plan? Can it be altered into one? It’s a very popular layout right now.
Buyers may be interested if the kitchen is spacious and has double entrance.
Families with children would love to have a backyard for playing.
If this is your first time, avoid the pitfalls of structural issues or major repairs that require you to take the home down to the studs.
So only buy the home if you think the layout may be interesting to future buyers.
After location and layout, the next thing to consider is the extent of work.
The work on houses can be divided into two categories: Cosmetic and structural
Experts say the perfect fixer-uppers are the ones that only need cosmetic upgrades. There are many buyers who would scoff at the houses that require small cosmetic repairs and simply walk away.
These buyers don’t know that problems like cracked tiles, peeling paint, smelly odors, and unkempt lawns are only skin-deep and can be corrected very easily to make the home appealing.
With some freshening up your home can be transformed into an ideal home that anyone would want.
Cosmetic changes are generally less costly and can even add value to the home.
Kitchen and bathroom renovation, wallpaper removal, floor refinishing, and new lighting installation are minor up grades that add value.
Moreover, you get to choose your preferred colors, furnishings, and fixtures to make the home perfectly suited to your own taste.
But experts warn against buying a house with structural damage, especially if there are major flaws in the foundation, septic/sewage system, roofing, siding, or other issues that affect the way a house works.
Think twice if the house has termite damage, water damage, needs serious upgrades to the electrical systems, or if there is a major mold manifestation.
They are not only costly affairs, but also can be dangerous to live in even after the matter is fixed.
If you find problems like these after a home inspection, experts say it’s probably best to walk away. These need to be treated by a licensed contractor.
Environmental problems such as termite damage or radon can be mitigated, but treatments may not always be successful.
Another big question is whether you have enough time to upgrade it to a dream house.
It will definitely take more time buying and fixing the fixed-upper home rather than having a simple move-in ready home.
Right from finding the right contractor, allocating funds for repairs, getting required permits… it all these requires time.
Also some unexpected delays and small issues and uncertainty of time frame is expected when it comes to repairs and renovation.
Be liberal when you estimate the time frame for the work to be completed.
If you are buying for investment purposes, then maybe there is time. But if you plan to move in, make sure you have the patience for living in a work zone.
There are three major things you need to include in your budget before doing any repairs:
A) Renovation Cost: A rough estimate is required, including new roof, HVAC, window fittings, or foundation up-gradations cost.
If attic space is to be converted to extra room, office or study area its cost to be included along with new furniture . The renovation costs (also include labor costs), supplies, and permits must be calculated.
Even before hiring a home inspector or a licensed structural engineer to evaluate the home, creating a reference sheet or estimates for the costs will help in a long way.
This cost assessment exercise will give you an idea if fixing the home will really fall within your budget.
B) Cosmetic Upgrades: Some like to get the cosmetic upgrades or repairs done from expert so a premium has to be added to your costs. Some other like to Do it themselves (fully or partially). Then in that case, they need to determine the materials they will need and how much they cost.
If a bathroom is to be upgraded, the cost of all the fixtures to be included in the list can be ascertained by visiting local supplier or through the brand websites.
C) Permits and Fees: Fees are to be paid to town or local municipalities for securing permits. Renovation carried out without permit from authority can be risky in the long run.
Each upgrades and type of renovation has certain permit charges and fees already fixed by city authorities.
These fees also change from town to town and can increase if the home is in high end area. So correct assessment of the fees should be made and be included in the estimate.
Buyer also needs this budget to get idea if this renovation can yield a good return when he later sells.
Some buyers may have to hire professionals or contractors for full repairs and renovation. Some others may decide to do certain tasks by themselves.
Before thinking of buying a fixer-upper, you need to consider your skills set as well.
Minor cosmetic upgrades can be easily learnt and be done; and in a way it can reduce labor costs.
If you’re skilled enough, a Do It Yourself stuff like putting a fresh coat of paint, changing the lighting fixtures, laying the tiles, fixing the toilet fittings, or tear down wallpaper etc can be done by yourself.
Those who wish to spend a little time on their home can use this approach and make their own home more appealing and it can be profitable as well.
If the home is for your own dwelling then it gives sense of satisfaction and pride.
An expert caution: anything related to electricity, house wiring, and major plumbing works are recommended to be done by expert only.
It is not easy to arrange for external financing a fixer-upper home. Still if the home seems to provide value one can check if they qualify for any home improvement loans.
The most popular choices can be the FHA 203(k) loan, and the Section 504 Home Repair program can also be helpful.
Just remember that all loans have their own strict standards and eligibility requirements.
An informed decision can only be taken after considering all the options and understanding the pros and cons of each program.
Before making an offer make sure you qualify for loan pre-approval.
Renovating a fixer-upper should not be considered a casual affair. Such a project can eat away your time, effort, money, and can be patience testing as well.
So once you finalize on a fixer-upper, there is no turning back.
Buying a home that people may initially reject due to small issues and converting it to perfect beautiful home; it is a challenge.
But if the challenge is accepted and some effort are put in with proper planning; it can means living in your dream home….. and you can make a significant profit when you sell it later on.