Choosing between a home that is ready or almost ready to move into or a fixer-upper is a big decision. Are you interested in making the needed repairs and customize your new home to your taste in upgrades and updates? If you are game to tackle a fixer-upper, consider the costs of the renovations, if you have the time for the DYI task, how soon do you need to move into your new home and your risk tolerance for the “surprises” you might find. A couple of ideas to help with some of the thoughts above. Make sure you have very experienced inspectors to help identify issues with the home. This will help provide assistance in developing your budget for the “must address” and “like to have”. Identify if you can, particularly if you need to move into your new home quickly, what is needed and what are you willing to address once you are in the home. For example, there might be an electrical issue that needs to be addressed immediately but painting interior walls you might be okay doing once you have moved in. Also, there are renovation loans that might be of interest. Your Realtor can provide you experienced lenders who have handled renovation loans.
Consider the thoughts and questions below in helping in the deciding if purchasing a fixer-upper is right for you. If you decide a fixer-upper is for you, it will help you in planning the steps, budget, timeline, type of loan, etc.
1. Have you built into your budget funds for the needed renovations as well as funds for the unexpected costs at a minimum?
The appeal of a fixer-upper is to purchase similar location and size home for a much lower price than a similarly sized and located move-in ready home. The challenge is determining exactly how much work the home needs, how much it will cost and when all is completed are the combination of the purchase price, the renovation costs and having the home that fits your needs and preference be equal to or more affordable than buying a home that is move in ready. Always keep in mind when developing your budget there needs to be funds set aside for the unexpected surprises.
2. Do you have a clearly defined vision for the home? Does everything need to be done at once or can some of the items be completed in steps over time?
It is important to define what you want in your new home so when you are done it is equal to or hopefully even better when completed. Defining your vision is essential both for determining costs as well as to complete the home of your wishes and preferences. Your level of detail down to items like the type of countertops, the kitchen appliances, the tiling in the bathrooms, lighting inside and out, the flooring, paint and so much more is what customizes the house to your home.
3. What part of the work on the home needs a professional and are you wanting to do some work yourself?
One way to keep renovation costs down is doing as much of the work as possible yourself that does not require a professional. Are you good at DIY type projects? If you are in one of the trades such as an electrician or plumber that can be a cost savings as well. Do be realistic about what projects truly qualify as DIY and what needs a professional. Traditional, most of the time when purchasing a fixer-up, the buyer(s) of a house will handle smaller renovation tasks/DIY projects and have the professional handle the other tasks that need their trained skills
4. Do you know or have a list of trusted or recommended Professionals?
To help in keeping costs down and keeping the renovations on schedule, having a list of Professional you know or recommendations from referrals from trusted sources is important. Whether you are planning on handling a small portion of a large portion of the DYI type projects, it is still very likely you will need Professionals for certain key tasks.
5. In planning your renovation, the timeline is very important. How soon do you want to or need to move in? In the interim, do you have a place to stay?
Some fixer-upper are in good enough condition you could live there while the work is being done and some are not. Besides the cost, time is an important consideration. If you need to move quickly, consider this factor in the fixer-upper you select or perhaps a more move in ready home would fit your needs as a better option.
Fixer-uppers have risks and the activities to complete that need to be managed. The advantage can be to have a home that is customized and personalized to your wants and needs.
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