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The idea of buying a fixer-upper property sounds great to some people. Not only are you purchasing a property for way below its market value, but you then get to do it up and put your own stamp on it, and end up with a property that costs twice what you paid for it. As I said, this sounds like a great idea, but it can be incredibly risky if you don’t know what you’re getting yourself into.
Here are some things that you should consider before purchasing your own fixer-upper home:
It’s All About The Money
There are lots of financial risks that can come with buying older or damaged property, so you need to be sure that you’re careful. Be sure to add up the costs of any repairs that you need to make on the property (this includes materials and labour), and deduct it from the property’s market value after the repairs and renovations. Take off another 5 to 10%, in case you want to add anything non-essential, or you come across any problems that require any funding. Whatever money is left should be your offer. If the offer isn’t realistic, then neither are your hopes for the house.
Stay Away From Structural Issues
Unless you have a Master of Engineering Management, it’s highly unlikely that you’ll be able to plan and undertake any structural repairs that need doing to the house yourself. It can be incredibly pricey to hire a contractor who will fix such repairs, which is why people tend to stick to fixer-uppers that only need cosmetic improvements. Things like painting the walls, installing new light fittings, and new flooring tend to cost a lot less than what they return in market value.
Be Prepared To Work
As mentioned above, hiring a contractor can be incredibly expensive, but so can hiring a plasterer or a decorator. For this reason, you’ll probably want to try to do as much of the work as you possibly can. Things like painting and wallpapering are relatively simple, but you may need to learn how to plaster the walls or install your own flooring. If you’re not prepared to get hands-on with your property, you may want to rethink your plans, as hiring people to do all of these jobs for you is likely to cost you a lot more than the house is worth.
Find Your Funding
It’s not just how much money you have at the end of the project that’s important; You also need to consider how you’re going to pay for the property itself, as well as the repairs and renovations. If you have the cash for the house itself, then credit cards are a great option for smaller projects that require less work, and therefore money. However, if your property requires a lot of work, then you may need to start looking into renovation or home improvement loans. Just be sure you shop around to find the best deals and interest rates possible.
Renovating a fixer-upper can be a lot of hard work, but if you’ve looked through all of this and still think that you have what it takes, then why not start looking for some funding?
