If you are thinking about buying a home that needs some fixing up, make sure to check out these helpful tips to get you started…
1. Save Up
When it comes to buying a fixer upper, you want to have enough money to cover the costs of a renovation along with extra funds to cover the miscellaneous and unforeseen costs that might happen along the way. Make sure you save up before jumping into a fixer upper.
2. 203k Loan
Have you thought about rolling the costs of repairs into your loan? Talk to your lender about a 203k loan to see if this is an option for you. There are extra steps but it might be worth it to roll some of the costs into your loan to keep more money in your pocket at the time your purchase your new home.
3. Hire the right Contractor
Make sure to ask around, do your research, and look through reviews for contractors to help you with the renovations. Get estimates and interview several before committing. You want to make sure the work is done right by trusted professionals.
4. Pick projects that pay
When putting money into a fixer upper, make sure you are putting it into the right place. For example, instead of putting $3,000 into a bathroom mirror take that money and put it into the Kitchen, new bathtub and nice tile, or maybe it is nicer flooring.
TIP: Kitchens and Bathrooms can look the most updated and outdated. These two rooms are known to give you a decent return on your investment. Well, as long as you don’t overspend on over the top items.
5. Roll up your sleeves
Be prepared to do some of the work yourself. Painting, ripping up old carpet, and landscaping are all things you can do yourself pretty easily. If you are really handy, you can save money installing light fixtures, laying tile, and installing new sinks. Don’t be afraid to roll up your sleeve, just make sure you are the right person to do it or it might cost you more in the end to fix the work.
Before you even make an offer on a fixer upper, make sure you crunch your numbers and answer these questions…
– What is the contractors estimated costs + labor?
– These costs + expenses of buying the home, what is the total?
– Is that number right in line with how much the home would be worth with these improvements in today’s market?
You don’t want to put your time, money, and effort into a fixer upper just to have spent more on the home that is it worth in today’s market. Unless you plan on staying in the home for 5-10 years or more, then stay away from this issue. Make sure that you evaluate and do your homework before even making an offer.