The fixer-upper home typically tantalizes home buyers with its potential for becoming the home of their dreams at a fraction of the cost. However, before purchasing a fixer upper and diving into renovations and repairs, there are a few key essentials to consider.
With any home purchase, location is important—if the neighborhood doesn't suit your needs, it's not the right one, even if the home if is a bargain. When buying a fixer-upper, the location becomes even more crucial. Make sure the neighborhood is maintained well overall and has the amenities you want.
Layout and Number of Rooms
When choosing a fixer upper, the layout and the number of rooms is an important consideration. Older homes often lack open floor plans, and their layout is generally boxy. If an open concept main floor is essential, then be prepared to tackle some major renovations. It's possible to knock down a wall, or reconfigure a floor plan, but it can be expensive. In addition, be sure your fixer upper has the number of bedrooms and full bathrooms desired. While these can be added, it will increase overall budget.
Condition of Home: Cosmetic Issues or Something More?
Cosmetic issues include things like painting, replacing trim, drywall repairs, and fixing/restoring flooring, and they can typically be done by an ambitious home-owner. However, other issues can be pricey and time-consuming to fix. Problems with the HVAC, roof, septic, or even replacing a full driveway can bust a budget and usually require professional help. A structural engineer may need to be hired to determine foundation problems or other similar concerns that could increase the renovation budget significantly.
Decide What Repairs You Can Do
Popular home remodeling shows make it look easy to knock out a wall to create a great, new open space. However, the reality often is very different. Before buying your fixer upper home, know what type of repairs you can complete safely and properly, and which ones are best left to the professionals. Older homes with out-of-date wiring definitely require a qualified electrician, while laying new tile in the guest bathroom may be a project you can tackle in a weekend. Beyond deciding if you have the ability to make the repair, you'll also need to decide if you really have the time and will. How long will it take you? Do you need to take time off work? Would it be more cost-effective to hire a professional?
Estimate Repair Costs Before Making an Offer
Before buying your fixer-upper, take time to establish a comprehensive list of repair cost estimates. You'll need these estimates to help determine how much to offer the seller. Does the home need a new roof? Get a roofing contractor out there and determine what the cost may be and how long the job will take. Don't forget to factor in delivery charges and the costs of permits. Depending on the renovations/repairs, your contractor may file those permits for you, but you'll still incur the cost.
Financing Options for Repairs/Renovations
Some home buyers opt to cover the cost of repairs and renovations for their fixer-upper by paying cash or using a credit card. You may be able to work out a deal with the seller to reduce the price or to include a contingency in the closing contract that allows for certain repairs. However, you may also opt for a loan to finance the work on a fixer-upper home.
Banks offer home-improvement loans and you may consider a FHA Title I Loan. This is a program through the National Housing Act and includes loans to make home improvements like updating out-of-code wiring, foundation issues, and roof leaks. This type of loan also can be used to make a home accessible for someone with a disability—from installing ramps to widening doors/hallways. Securing a Title I loan from HUD-approved lenders helps protect home buyers from fraudulent contractors.
A fixer-upper offers a lot of positives to a home buyer. It's the opportunity to really make a home something special, something truly yours. However, before buying that fixer-upper, be sure to weigh all the factors, from time commitment to actual costs.