What to look out for in a fixer-upper?
Whatever the reason, a fixer-upper is a great choice for homebuyers with the time and resources to complete the project. Taking on a fixer-upper could also help improve the neighborhood and nearby property values. For more information on buying a fixer-upper and what to look for in the process, read our guide below.
Before buying a fixer-upper, be aware of:
- Your limitations – Do you have ample time on your hands to oversee a renovation or are you swamped with work? Are you completing much of the renovation without a contractor or do you need to hire someone for the majority of the work? Make sure you know your time and capability limitations before taking on a fixer-upper.
- Your risk tolerance – From the unknowns about what lurks behind the walls to the financial risks, buying a fixer-upper is not a risk-free undertaking. Most homebuyers need to have some degree of risk tolerance if they plan to buy and renovate a home.
- Your budget – You absolutely must set a budget before taking on any renovation project. Know what you can and cannot afford to do. Explore different contractor bids and plan the renovation budget accordingly. Make sure you have plenty of wiggle room in the budget for unforeseen problems that almost always arise when renovating a fixer-upper.
- Your financing options – How are you going to pay for the renovation? Many home buyers put the majority of their cash towards a down payment. Without money left over, you’ll need to explore financing options, such as a home improvement loan, home equity loan, credit card possibilities, and government loans.
- Your local housing market – Make sure you have a good handle on the local real estate market before purchasing a fixer-upper. This should help ensure that you get a fixer-upper for the right price and avoid overpaying at the beginning of the process.
- Your local permitting requirements – How fast or slow is your local permitting process? In many cities, getting a permit for any change to a home can take months. If the home is located in a historic district, be aware that the permitting process may be even more arduous.
- Your contractor options – Do you know of reputable contractors in your area? Do friends, family or neighbors have someone they can recommend? Make sure you have plenty of good options before purchasing a fixer-upper.
Considered all of the points above and still set on buying a fixer-upper? If this is your first fixer-upper experience, get ready for a wild (sometimes fun) ride. The process can be exciting, stressful – but oh-so-worth-it once it’s complete. The advantages of buying a fixer-upper can far outweigh the cons in many cases. Best case scenario: you purchase the fixer-upper for a good price, with plenty of wiggle room to pay for improvements. You dramatically improve the value of the home (without going broke), and you’re eventually able to move into your dream home. Let’s hope that’s how your future renovation turns out. In the meantime, you’ll need to be very particular about which fixer-upper you decide to buy.
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