Category Archives: fixer upper

6 Questions to Ask When Buying Your Fixer Upper

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color swatches and plans for fixer upperNo one wants to buy a money pit; you know the home that looks like it needs a few cosmetic updates but actually needs one repair after another.  Or the home that you know needs major updates—so many updates that you won’t get a return on your investment no matter how long you live there.  To increase your chances of avoiding both of these scenarios, ask yourself these questions before you purchase your perfect “fixer upper.”

Can I qualify for a loan to purchase a fixer upper?

Not all real estate loans can help you purchase your fixer upper—and give you the cash for repairs and renovations.  Likewise, not all lenders offer loan products ideal for owners facing a list of projects; use these tips to find the lender perfect for your home purchase.

Is the location ideal?

Walls can be taken down.  Counter tops can be changed.  Flooring can be ripped up and replaced.  A home’s location is forever.  If you are buying your fixer upper as a long-term primary residence, look for a home in your preferred location.  If you think you might be selling the home within the next few years, search for a home in most buyers’ preferred location.  To do so, make sure you choose a real estate agent knowledgeable in the area you are searching in and inform them of your short-term or long-term intentions.  They can recommend locations that fit your short-term and long-term goals.

Do I have any homeowner association or historic requirements that could impact my plans?

Go into your fixer upper purchase with eyes wide open, as the saying goes.  Find out if renovation plans for your fixer upper need to be guided by any historic or homeowner association requirements.  Check with your real estate agent (that’s why it pays to hire an experienced agent) for these important details before you sign the dotted line—and before you find out your renovations are going to cost more or need to be redone to meet association guidelines.

Are there any major structural or system issues?

A major drain to any renovation budget is a surprise significant structural or system problem, such as a leaking roof or furnace that needs to be replaced.  To avoid those unpleasant surprises, hire a home inspector (or your contractor who is doing the work) to closely inspect your home and give you a report on the condition on major home systems like the HVAC, roof, foundation, structure, and plumbing.

What is the TOTAL cost to repair the home?

Even if the home only needs cosmetics (light fixtures, flooring, etc.), the costs can add up.  To make sure you make a good investment, know the budget needed for repairs and renovations.  As confident as you may be about that number, include a contingency fund beyond the estimate your contractor gives you.  Your contingency fund can cover any unexpected costs that may arise during construction.

What are the comparables (after the renovations)?

Comparables are properties that are similar to yours—with similar lot sizes, number of bedrooms, square footage, etc.  If you want to ensure that you don’t “overinvest” in a home for the neighborhood, look at the comparables to ensure that your total investment is in line with local sale prices.  A real estate agent knowledgeable in your area can assist you with comparables so you can make a sound investment—so you can avoid buying a “fixer upper” money pit.