Some people like big projects. This is true for people looking to purchase a fixer upper. They don’t see the house as it is, but as it should be. Beware of your imagination though, rehabbing a house can cost you both financially and emotionally if done incorrectly. Today, let’s look at the things to consider when purchasing a fixer upper.
Why are you Investing in a Fixer Upper?
One of the most important things to consider prior to getting a fixer upper is understanding your intentions. Are you doing it to flip the property and make a profit? Are you doing it as a present to a family member? Maybe you simply like the challenge of an intensive project?
Your intents will greatly determine what you will have to consider in the long run. For instance, if you are trying to flip the property and make a profit, you must consider the amount the repairs will cost compared to the amount you would like to gain. Be practical in this situation. Do your research. What is the housing market like in that neighborhood? How much value could you actually add?
What is Your Budget?
Budgets can be tricky, between a down payment, monthly mortgage, building materials and contractor fees, purchasing a fixer upper can get costly. It is important to have a solid itemized budget. To begin, figure out what is reasonable. What is the amount you are willing to pay, as well as the amount you are eligible to receive through a lender? This will give you a basic starting point.
Consider How Much it Costs Initially Versus How Much You’re Investing in Rehab
Part of your budget and overall planning should be the difference between the cost of the house as is compared to the amount you will have to invest to fix it up. In order to do this you must find a trusted contractor. Things to think about include:
- Is plumbing all functional?
- Is the electrical properly wired?
- When will any appliances need to be replaced?
- Will the floors need to be replaced?
- What rooms will be fully rehabbed?
- What will it cost to fix each room individually?
- Am I repairing it myself or am I hiring professionals?
All of these will help you better determine what your goals are, as well as the amount of money that will require you to complete your project. Remember, budgets can easily be inflated by unforeseen expenses. The more meticulous you can be, the better you will be in the long run.
Do Your Research
Be thorough with your research. We’ve all heard horror stories where a couple buys a fixer upper, and it turns out to be tens of thousands if not hundreds more to complete their goal. Whether it’s consulting a real estate agent to buy a property, consulting a contractor to inspect the property or hiring a contractor to complete the rehabilitation, always find vetted and trusted sources. The difference could end up saving you thousands in the long run.
Ultimately, only you can decide whether a fixer upper is right for you. There is a lot of emotional and financial considerations you must make to undertake such a project. Evaluate the pros and cons and see which outweighs the other. You may find that it isn’t worth it in the long run.