Tips for Buying a Fixer-Upper Home
Tips for Buying a Fixer-Upper Home
Whether you’re looking for your next residence or hoping to turn a tidy profit, a fixer-upper home might be perfect for you. Buying a fixer-upper is often one way to get more house than you might otherwise be able to afford. For an investor, a fixer-upper can often generate quite a profit. The trick, however, is to spend less on repairs and renovations than you save on the initial purchase.
The secret to buying the right fixer-upper is knowing how to pick the right home to purchase. Here are six important steps you need to take when scouting properties.
Look for a home in a popular neighborhood. Homes in popular areas often sell for more money and quicker than in areas not on peoples radar. In addition, since location is a driver of marketability, it's usually best to avoid fixer-uppers next to busy streets or freeways or across the road from a factory or airport. If the goal if a fixer-upper is to buy, fix and then sell, it's best to think of where most potential buyers may or may not want to live, though of course there are always exceptions.
Evaluate the Floor Plan
In addition to curb appeal, you’re looking for a home with a good floor plan. The homes configuration should flow naturally from one room into the next. For resale value, look for a property that has at least three bedrooms and more than a single bath. Avoid a layout with bedrooms at opposite ends of the house, a kitchen with only one entrance, and a dining room through which residents must access all other rooms in the house. Finally, verify that each room could work on a functional level.
Assess the Condition of the Home
Consider how much work you may want to undertake yourself and the extent to which you’ll use professionals to restore a fixer-upper to a sellable or livable condition. The best projects are usually those primarily cosmetic in nature. Here are some easy cosmetic fixes:
•Painting, removing wallpaper, patching walls
•Laying carpet or tile or refinishing floors
•Installing light fixtures or ceiling fans
•Repairing broken windows
•Installing, painting, or refacing kitchen cabinets
•Replacing bathroom subflooring
•Adding a deck
•Replacing light switches or receptacles
•Replacing baseboards or adding some trim
These go on the potentially expensive list that may require a professional:
•Replacing an HVAC system or adding air conditioning
•Replacing sewer lines, plumbing, and electrical wiring
•Entire bath or kitchen remodels
•Constructing a garage or other addition
•Shoring up or leveling a homes foundation
•A new or repaired roof
Get a Home Inspection
Protect yourself with a home inspection completed by a credentialed professional before signing a contract (or after, depending on the State where you may live). And as the result of the inspection report items, you might be able to persuade the seller to either correct some of the problems or even lower the cost of the home.
The most common types of checks for a fixer-upper include:
•General home inspection
•Engineering report for natural hazards or geological disclosure
Get Contractor Estimates
As you work through the home inspection phase, start collecting estimates from contractors. This will suggest the complexity of the work needed and if the property is one that may not be a good fit. It's also important for creating a renovation budget and should reveal whether you can do some work yourself.
Perform a Reality Check
Once you have some estimates, it’s time to do a reality check on whether it’s a sound idea to purchase a specific property as a fixer-upper. Here are some basic questions to ask yourself:
•How much time are the repairs likely to take, and do they fit in with anticipated length of occupancy or desired property “flip” date?
•Is the budget flexible enough to accommodate extra cost associated with any unanticipated work?
•Is it truly reasonable to conclude that the scope of the project fits within the amount of effort you’re willing to exert on a fixer-upper?
If rehabbing a property seems overwhelming, a prospective buyer can walk away from it having gained considerable knowledge about fixer-uppers.
When all considerations suggest a “go,” it’s time to make an offer. Once there is a purchase contract, expect a flurry of activity. Finding just the right fixer-upper might require sorting through a ton of details, but watching the finished home come in on time and within budget is very exciting and potentially financially rewarding.