Making a house your own by remodeling, moving walls, opening things up is often a dreamy idea. But when you really think about it, what are the factors may impact your decision to delve in the world of Fixer Upper?
Sometimes a home comes up for sale that is well-below market value for homes similar to it. However, sometimes these homes are priced low because they need a lot of work. It might be tempting to save money on a purchase and transform the home into exactly what you want, especially if the home is in a very desirable area. Before you make the leap, you should ask yourself if this type of project is right for you and the way you live:
What shape is this house really in? Years of neglect don’t always show up in dated wallpaper and stained linoleum. It can show up as a leaky roof, rot, and structural damage. We always recommend getting an inspection before purchasing a property, even if your plan is to gut it. If the initial inspection turns up problems that are concerning, calling in a structural engineer or other experts is a good use of your money so you get an idea as to how extensive problems are.
How much is this going to cost? Although builders and contractors with a lot of experience can look at a kitchen or bathroom and know that x will cost $20,000 and y will cost $30,000, those are very very rough ballpark figures. They don’t take into account a discreet vent pipe that may need to get relocated or a plumbing hidden in a wall that needs to get updated. A contractor may be able to give you a rough estimate in a few hours but ask for a detailed proposal so you both understand the scope of work. Make sure you include a 20% contingency budget to deal with unforeseen problems.
How are we going to deal with hidden problems? Even if you get the home inspected and bring in contractors to give you quotes for work to be done, that doesn’t mean more problems aren’t hidden behind the walls and under the floors. Although you should have a 20% contingency padding in your budget for such situations, what happens if the needed repairs exceed that?
How are we going to live while the repairs are being done? Are you planning on having all the work done before you move in? Or will you be tackling one project at a time? Are you okay with living with a certain amount of chaos, dust, and missing functional spaces? Can you function without a kitchen for weeks on end? Not all people can.
What if the bank won’t give us a loan for this property? Banks want to make sure the asset that is being used to secure the loan is sound. Therefore most banks will have criteria for what types of property they will lend on. Working around this may take some strategy and we may need to shop around to see what options you have.
Buying a home in disrepair and renovating can indeed be a strategic way to build equity or simply have a home you will love and enjoy for years to come. However, before taking the leap, make sure this is a fit for your situation and your personality. If you would like to learn more about this option, let’s talk! Give us a call, text or email any time.