What to Look For in a Fixer Upper
For some people, finding a fixer-upper is like finding a diamond in the rough. The potential of what this property could ultimately be is an irresistible temptation for many. The idea of upgrading and adding value to a broken-down old house seems like it may be fun — and it may be, at first.
Remember, though, that a fixer-upper comes with baggage. There are prices to pay (often high), decisions to make, budgets to stay within and unexpected surprises that may jump out from any corner or crack.
In order to make buying a fixer-upper the most rewarding experience, get organized, focused and ready to work with a team.
Here are a few tips to set you on your way to fixing up a fixer-upper:
Know your limitations and patience level. Know what skills you need to bring to the property, and where you will have to bring on professionals. Know your budget and the time you can dedicate to the project.
Check your finances
Even if you are on top of your budget, you should allow for unexpected expenses, for repairs and structural issues.
There are also renovation loans you can consider:
- FHA 203(k) renovation loan: possibly good for those with lower credit scores. May require a lower down payment on the property.
- Fannie Mae’s HomeStyle Renovation Loan: can also be used on specific renovation projects, like bathrooms or replacing a roof.
- VA renovation loan: designed exclusively for veterans.
Build your team
The challenges of your fixer-upper may not allow you to go it alone. Look for high-quality, highly recommended professionals who can help you achieve your goals. A good way to find the professionals with the skills you may need:
Know the permitting/licensing process
This is usually a local concern, so make sure you are aware of all the permits or licenses you may need to obtain in order to proceed with your work. You may be required to purchase insurance for your project, and you may need to call in inspectors to approve your work. Ask your contractor/architect for advice on this — they have more than likely been through this many times.
Learn the conditions of your property
There are easy fixes, like replacing doors and windows and buffing floors, but there are also extremely complicated fixes, like replacing an HVAC system or reinforcing the property’s infrastructure. Before you take any steps, make sure you can discern the simple fixes from the more complicated ones.
Consider the location
If your property of interest is located next to a busy intersection or roadway, or near noisy bars, schools or stores, there may be a reason why the property is neglected (an unappealing location).
Consider the layout
Look past the initial challenge of the fix-up — is the property practical? Are there enough bedrooms for you and your family/housemates? How many bathrooms are there for the living situation to make sense? You may have to consider adding rooms/bathrooms.
Pay attention to the floor plan. Does it flow sensibly? It may not be practical for you to pay for major construction to make the floor plan make more sense.
Also, think ahead to when you may want to resell the property. Is it similar to other houses in the market? Will buyers find the house interesting and practical enough to consider purchasing?
Considering a fixer upper may not turn out to be an easy fix. Before you take that big step, know what it’s going to take to make the property functional, and how much that task will cost you. Being organized, well funded and assisted by a trusty team will make the project more likely to wind up to be a success.