If you’re a first-time homebuyer considering a fixer-upper, the pros and cons are pretty cut and dry: It can be a great investment if you buy a property for under market value and increase its value with modifications. Or, you could end up getting a run-down property at a good price only to find that you’ve invested in the dreaded money pit, a house with foundation problems or major plumbing or electrical problems.
Instead of making a killing in the local market, you might find yourself with endless repairs and drained resources. It’s a daunting challenge for many, an irresistible opportunity for others. Estimate your home affordability based on annual income, down payment, monthly spending, loan type and current average APR. If you’re determined to go for it, here are some ideas for getting started with your modifications.
Bring in an inspector
A home inspector can help you determine the most important needs. In some cases, you can have an inspection done before purchasing a property, in some cases you can’t. If you haven’t been able to have your new property inspected, do so as soon as possible so you understand what you’re up against. You need to know as soon as possible if something’s amiss with the foundation, roof, or windows and where to begin the hard work of turning your fixer-upper into a home.
Check out the roof
Any fixer-upper should begin with an inspection of the roof. Shingles need to be replaced every 15 years or so and should be examined carefully on a regular basis. You may need to replace a lot of shingles if they’re curled up or loose. Look carefully around the attic for signs of mold and water damage, which may indicate that the roof itself needs to be replaced.
If you like hardwood flooring, examine what’s in place before deciding to tear it all up and start over. Often, new homeowners are surprised to find out that there’s a perfectly good hardwood floor just waiting for them. If parts of the hardwood are damaged, you may be able to simply rehabilitate the flooring where there are imperfections. Or, you may be able to refurbish the entire floor, sanding the surface and putting down a fresh coat of stain to make it all look good as new. Perhaps tile may be your favorite choice. If so, make sure you know what you’re doing: Tiling can be a tricky and painstaking job, requiring specific equipment. Mortar or thinset will be needed to attach tile to the sub-floor, grout to fill the cracks. Be sure you have tools that are up to the job, including reliable tape measures.
Flooding in the basement can be a costly and persistent problem, so make sure you’re prepared. If your fixer-upper has a sump pump, make sure it’s still working properly. If it isn’t, you’ll know right away the first time you get a hard rain or snowmelt. Clean up the area in which the pump operates to avoid clogs, and clear out the area directly around it in the event of flooding and water damage. Make sure the power source for the pump is several feet off the floor. If it’s not operating correctly, you’ll need to put in a new one.
The buying process
Before you make an offer on a fixer-upper, factor in the expected cost of all that work and add about 10 percent for unexpected needs. Estimate what you believe the house’s market value will be after renovations, subtract the cost of your modifications and base your offer on the difference. There are several ways to finance a renovation, including an FHA 203(k) loan or a Fannie Mae Homestyle loan. Once your fixer-upper is fixed up, compare the value of your new property to current market values. If you’re way on the plus side, you might consider selling and turning a tidy profit.
Consider what your intentions are when taking on a fixer-upper. If renovating and flipping it is your aim, pay close attention to home values in the area. If your intent is to make it your home, be certain that you’re in a good location. Either way, you’ll need the skill, tools, and resources to make it work out for you.
Courtesy of Bret Engle Pixabay.com.
To have your rental or property for sale featured on Real Estate Roundup contact Mike Uchalid at Mike.Uchalid@bristolroundup.com
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