Tips for Buying a Fixer Upper
I was recently trapped in a waiting room running back to back Fixer Upper programs. While I love a good HGTV binge, this show is cringe worthy for anyone who has been through a large-scale remodel. Public Service Announcement: tearing down a load-bearing wall to triple the size of your kitchen so you can fit in a marble-topped island the size of small car isn’t a simple or inexpensive task. So, no, Chip, your boyish antics aren’t charming and your pricing is WAY OFF.
Buying a fixer upper in a lower price range and using the money you “saved” to remodel is a great way to get the features and finishes you want. BUT, you have to go into the purchase with your eyes wide open and a calculator by your side. Check out these tips to help you decide if a fixer upper is a great deal or a money pit.
Are we talking cosmetic work or heavy-duty repair and remodel? If you don’t know, find someone who does and be sure you understand what needs to be done to make it worth the investment. Removing popcorn ceilings, switching out fixtures, sheetrock repairs, and painting are mostly cosmetic and can be done DIY if you need to cut costs or spread expenses over time. Be sure you know exactly what needs to be done. Changing the layout can be a serious budget buster. Try to find a floor plan that works or needs only minor modification – changing the location of gas lines, water lines, or tearing out walls can get pricey fast.
That costs how much?
In order to decide if your fixer upper is a deal or if you’re getting in over your head, you need to get your numbers right. Gather multiple quotes from reputable contractors for each project or work with a General Contractor to consolidate estimates. Pad your budget by using the highest quote and adding in a 15% contingency. Don’t forget to get quotes for desired cosmetic changes. You’ve probably seen DIY shows and thought, how hard can it be? Knowing the cost for a professional to come fix your mistakes or handle projects were safety is a factor will help ensure you have the funds to finish.
The waiting game
Are you ready to play it? Because you’re going to have to live with all of the features you hate until you can plan for, arrange and get through remodeling or shell out cash for alternate living arrangements. Making changes to a rarely used area might not cramp your style, but any remodel involving space central to daily life is hard. Can you afford to cover rent or stay with family while the work is done? Don’t forget that it’s pretty standard for remodeling to take longer (and cost more!) than expected.
Location, location, location
That’s a saying for a reason, folks. It’s important. A good rule of thumb is to find the worst house in the best neighborhood. Don’t improve a property beyond what the market can bear. Your all-in cost of purchase price plus renovations needs to be on par with comparable homes in the neighborhood. If renovated homes are selling for $200k, don’t buy for $150K property and put in another $100K . Remember, the goal is to get the home you want and a good value for your investment.
Don’t get crazy
Let’s face it, if money were no object, you probably wouldn’t be reading this article. Putting in lavish details that blow the budget just isn’t worth it in the long run. Drawer pulls at $100 each adds up fast. Take care of all the necessary repairs and fundamental renovations first. Shop around for bargains or lightly used items to repurpose at a discounted rate. You can add details and additional upgrades once the dust settles and you have have your finances in check.
Don’t go it alone
Find a real estate broker you can trust and use their knowledge and resources. They can identify and evaluate homes that might work for your budget and needs. Your agent will arrange for estimates for needed or wanted renovations while you’re still under contract to be sure that you put in the right offer. Ask them to recommend a lender to help you understand renovation mortgage programs tor other financing options available. Your realtor can also put in an offer that takes necessary repairs into consideration and negotiate if new concerns arise.