Fixer-upper homes are worth it if you have the time, resources, and know-how (or willingness to learn). They’re an affordable option for people whose budgets won’t allow for a home in perfect condition. When you’re house hunting, don’t neglect to look for fixer-upper properties. Many of them simply require cosmetic work, and if the “bones” are good and you can see past that 1970 vintage shag rug, you may luck into a great bargain.
Still on the Fence? Pros and Cons
It’s a smart investment if you know you can buy under market value and increase that value with various repair and design projects. When you purchase a move-in ready home, you may not like the choices made by the previous owners; replacing brand new kitchen countertops, fixtures, or flooring is hard to justify, even if it’s not your style.
If the home requires structural repairs to the foundation, plumbing/electric overhauls, or knocking down or moving walls, you’re looking at higher costs. These more complex repairs also require an expert, which means finding a contractor whom you trust. On the other hand, you can tackle less complicated cosmetic changes yourself gradually as your budget permits.
Do This Before You Buy
Hire an experienced home inspector to evaluate the house from the roof to the basement. Inspectors are quite inexpensive in Malvern, Pennsylvania and you can expect to pay between $387 and $429 to have the home inspected. Bring a contractor along to get a more complete picture of necessary repairs. Before you make your offer, add between 5 and 10 percent to account for those repairs and unforeseen issues. Subtract the cost of the renovation from your (and the real estate agent’s) guesstimate of the house’s value after you complete the repairs. Your offer should not top the difference between the two numbers.
Finally, once you’ve decided to take the plunge, secure your financing.
Financing a Fixer-Upper
If you know that the home of your dreams needs serious TLC, you can take advantage of an FHA mortgage using the HUD 203(k) program that allows qualified buyers to purchase fixer-uppers. This article from FHA.com provides the most updated information about how the program works. You could also elect to use a HomeStyle loan, but those loans don’t allow for DIY repairs.
Prioritizing Repair and Design Projects
After you’ve had your home inspector evaluate the home’s bones — its electric, plumbing, foundation and structural elements are all areas, which can run into high costs — ask yourself these questions:
- What must I do to safely live in the house? Evaluate electrical and plumbing systems. Identify what’s broken, malfunctioning or beyond repair and needing replacement before you can move in.
- What would be easier to repair, replace or update before I take up residence? Technically, it’s easier (but not always feasible) to do everything in an empty house. Some experts also recommend living in a house for a while before tackling major renovations for kitchens and bathrooms.
- What’s your budget? If your list has 15 items, and you can only afford to fund six of them, tackle those first. When you’re developing your budget for each project, remember to add another 10 percent or so to cover any unexpected expenses.
- What’s quick or easy to do? Sometimes just adding a coat of paint in colors you’ve chosen is enough to help personalize your new home. Generally, paint is also the least expensive renovation out there.
DIY Repairs — and the Right Tools to Do the Job
Now that you’ve taken possession—and a deep breath or two—assessed and prioritized the repairs the house needs, it’s time to dive in. Hire a licensed electrician or plumber to tackle electrical and plumbing work, unless you’re well experienced and comfortable doing the work. Improper work can lead to many issues and potential fire hazards.
Make sure you’ve got the right tools for the job. For serious renovation work, experts recommend:
- Cordless drill
- Oscillating multi-tool
- Shop vac
- Stud finder
- Reciprocating saw
- Circular saw
It’s Finished! To Stay… or to Sell?
Chances are that after you’ve finished your renovations, your home’s value will increase; however, many experts recommend waiting five to seven years to sell the home. Of course, after all of that hard work, you may decide that you absolutely adore the house and plan to remain there for many years to come.
Although it looks incredibly simple on television, buying a fixer-upper takes a lot of work -- not to mention plenty of fortitude. Getting the house in tip-top shape will tire you physically and mentally, but at the end of the day, you’ll have a beautiful property that’s all your own. After that, only one question remains: Will you stay, or will you sell?
Article provided by Bret Engle from DIYGuys.net.