As we talked about earlier today, buying a fixer-upper can be a real opportunity, but it can also be a money pit. Not to mention relationship-destroyer, and time-gobbler. So, how do you know when you’re looking at opportunity and not DIY disaster?
First, you need to determine whether or not you can really afford to take on the project of home renovations – and this means more than just looking in your wallet. Do you work full-time? Maybe you won’t have time to complete the renos that will be needed. Are you sure you can afford to do everything that’s required to the home? There may be more than you know lying beneath the surface. Do you have any previous contracting or renovation experience? If not, maybe you should reconsider your plans or, hire a professional contractor to take over all or part of the project for you.
Once you’ve decided you have the time, funds, and patience for the project, it’s time to find the fixer-upper that’s going to become the home of your dreams. But during the purchasing process, you must be extra careful as well.
When looking at a home that needs fixing up, buyers sometimes get lured into the trap of paying too much. This is because they don’t look at the home as it stands, but the potential of what it will be after they’ve made the repairs. This is a big mistake, even if there’s a current bidding war that you can’t stand to lose out on. Only pay fair market value for any home, and that includes ones that you think will be worth twice their value in a year or two. The less you pay now, the more you’ll make up in resale value. Keep that in mind, and you should be just fine.
Another trap that buyers often get caught in is looking at a property that’s been sitting on the market for a long time and now has had its price drastically reduced. Paired with the “minor” cost of renovations and the return in resale value, that low price can look especially attractive to homebuyers. And while it’s true that this might be the perfect DIY opportunity, it could also be a huge mistake. Before you scoop it up, ask yourself (and your Realtor, and the home inspector,) why it’s been on the market so long. The chances are, there are some pretty major things wrong with it, and you might not be able to spot them all just by looking.
You should never buy any home without having a home inspector look it over first and come back with a full report; but this is especially true when it comes to fixer-uppers. Again, while you might be able to tell that the bathroom needs new tile or that the carpeting needs to be ripped up, you might not be able to tell that the entire home needs a new electrical system. But an inspector will; and that might change your mind about buying the property.
Lastly, whatever property you end up buying, if you’re going to be taking on any project of any kind within it, set out a clear budget and then add 10 – 15 per cent onto it. You’re bound to go over in costs and time, and being prepared will make it much less stressful.
Do you have a story about your own DIY project that you’d like to share? Maybe some tips you picked up along the way? Leave a comment below or, Like us on Facebook and leave a message for us there!