Are you considering buying a fixer-upper? If so, you’re not alone. A recent survey by the National Association of Home Builders found that 43 percent of home buyers are interested in purchasing a fixer-upper. If you’re thinking about buying a fixer-upper, there are some things you need to know.
1. Know your budget.
It’s important to have a realistic idea of how much you can afford to spend on a fixer-upper. Keep in mind that you’ll need to factor in the cost of repairs and renovations when determining your budget. You need to make sure you have enough money set aside to cover all of the costs associated with the purchase and renovation of the property. A good rule of thumb is to set aside 20 percent of the purchase price for repairs and renovations.
2. Get a loan that covers the purchase and renovation costs.
If you’re planning on financing your fixer-upper, you’ll need to get a loan that covers both the purchase cost and the cost of the repairs and renovations. This can be difficult to find, but a few options are available. The FHA 203(k) loan is one option that you can use to finance the purchase and renovation of a property. Another option is to get a construction loan from a bank or credit union.
3. Hire a qualified contractor.
If you’re not planning on doing the repairs and renovations yourself, you’ll need to hire a qualified contractor. Make sure you take the time to interview a few different contractors and get estimates before hiring someone. You want to find contractors knowledgeable in renovations that increase property value, from installing stone countertops and fireplaces to replacing windows and doors.
4. Get the necessary permits.
Before you start any repairs or renovations, you need to make sure you have the necessary permits. Depending on the work you’re planning to do, you may need to get a building permit, electrical permit, or plumbing permit. You can typically get the necessary permits from your local building department. Work with your contractor to make sure you have all of the necessary permits before starting any work.
5. Conduct a thorough home inspection.
Before you finalize the purchase of a fixer-upper, it’s important to have a thorough home inspection conducted. This will help you identify any potential problems with the property that will need to be addressed. A qualified home inspector will be able to identify any major repairs or renovations that need to be made. This will also allow you to get an accurate estimate of the cost of the repairs and renovations that need to be made, as you will be able to factor in the cost of labor and materials.
6. Don’t forget about the exterior of the property.
When you’re considering buying a fixer-upper, it’s easy to get caught up in thinking about the property’s interior. However, it’s important to remember that the exterior of the property is just as important. Make sure you take the time to inspect the exterior features, including the roof, gutters, and siding. These are all important components of the property that need to be in good condition.
7. Have realistic expectations.
It’s important to have realistic expectations when purchasing a fixer-upper. Keep in mind that fixer-uppers are called fixer-uppers for a reason. They’re usually in need of repairs and renovations. Don’t expect to find a perfect property that doesn’t need any work. Be prepared to put in the time and effort to make the necessary repairs and renovations to the property.
8. Have a contingency fund.
When you’re buying a fixer-upper, it’s important to have a contingency fund to cover any unexpected expenses. When performing repairs and renovations, there are always unforeseen costs, so it’s important to have a little extra money set aside to cover these costs. This will help you avoid going over budget and will give you peace of mind knowing that you have the funds to cover any unexpected expenses.
9. Know your limits.
One of the most important things to remember when buying a fixer-upper is to know your limits. If you’re not experienced in home repairs and renovations, it’s important to hire a qualified contractor to do the work for you. Trying to tackle too much work yourself can lead to costly mistakes that can further decrease the property value. It’s important to know your limits and be honest with yourself about what you can and cannot do.
10. Have patience.
Finally, be patient when purchasing a fixer-upper. It can take a lot of time and effort to get the property in top condition. Don’t expect to buy a fixer-upper and have it completely renovated overnight. It takes time to do the necessary repairs and renovations, so be patient and enjoy the process.
When buying a fixer-upper, it’s important to keep in mind that there are some key things to remember. By following the tips outlined above, you can be sure that you’re making a wise investment in a property that will need some work. You can turn a fixer-upper into a beautiful home with patience and a realistic attitude.