What to Look For When Purchasing a Fixer-Upper as a First-Time Home Buyer
It’s easy to get swept up with the idea of purchasing a fixer-upper and transforming it into your dream home. However, you shouldn’t buy the first run-down house you come across. Finding the right fixer-upper for you can be just as much of a process as a ready to move in home.
Set Your Budget
Calculating your budget when shopping for a fixer-upper can be a challenge in itself. In addition to what you are putting down as a down payment and are planning on your monthly mortgage costs, you will need a renovation budget. On top of this, House Logic recommends adding 10 to 20 percent buffer for unseen problems that may arise as well.
The renovation budget is going to vary from house to house and is dependent on the types of repairs and projects the home needs. It needs to be calculated before you put down an offer. However, the fact remains that you do not want to put so much time and money into your renovations that you end up spending more than what the house is worth. Whether you plan on selling right away or living in your new home for a while, a new house is an investment.
Look at what the homes in your area are selling for. This is a good gauge for what your fixer-upper will be worth when you are done. Keep in mind most fixer-uppers are generally 8 percent under market value and that the current average listing price for a fixer-upper in San Francisco, California, is $1.34 million.
Watch for Red Flags
Large structural renovations are an easy way to drain your budget. Before you purchase a house, hire an inspector to check if there are any unseen problems. They will be able to tell you if there are any structural, electrical, or plumbing issues you will need to address.
If you still love a home despite any of these red flags, make sure you have the budget to address these issues. Do not forget to include permit costs and look into local zoning laws. Realtor.com warns buyers that these things add up quickly.
When you finally get to renovating, be sure to address any of these larger issues first. These projects tend to be the messiest and most invasive. You will want to get them out of the way as quickly as possible. Not to mention, if you plan on living in your home during renovations, you need it to be safe before you can do so.
Break Out the Toolbox
A great way to save your budget is by DIY-ing as much of your renovations as possible, so make sure you have plenty of tools (drills, saws, sanders, etc.) on hand. Keep in mind that everyone has different strengths. While you may not be comfortable with a wet saw, your partner might. Or, maybe you feel confident replacing the floors while they can handle the electrical.
Before you build something or tear anything down yourself, make sure you have done your research and are using the right tools and constructing safety. You do not want to have to bring in a pro to fix your mistakes. Play to your strengths and bring in professionals when necessary.
The best fixer-uppers are the ones that require mostly cosmetic updates. Many buyers will overlook amazing homes because they cannot see past poor interior design. Take advantage of this. Likewise, as you near the end of your renovations, you will need to decide if you would like to continue to live in your home or sell it for a profit. If you’re flipping the house, remember that the more generic the interior design, the easier it will sell. If you’ll be living there for a while, now is your chance to truly personalize your home.
Finding a Fixer-Upper
Investing the time, money, and energy into a fixer-upper can be incredibly rewarding. But make sure you are ready for the challenge before diving in. Take your time and look at multiple options. Your perfect fixer-upper is out there.
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