The right fixer-upper property is a canvas waiting to be painted, a dream home waiting to be realized. The wrong fixer-upper is a waking nightmare, a money pit that slowly becomes impossible to manage.
How can you find the right fixer-upper while avoiding all the wrong properties? Shopping for a fixer-upper is unlike any other kind of real estate search, and you should plan accordingly. If you’re interested in finding a great fixer-upper, start by following these five tips…
1. Secure the Right Financing
Buying with cash? That’s great! But most buyers are going to need financing for their fixer-upper purchase. It’s important they understand the various kinds of financing available – and they choose the right one for the situation.
For example, FHA 203(k) loans allow buyers to finance up to $35,000 into a mortgage for repairs, improvements and upgrades to their new home. Similarly, veterans can secure loans through the Department of Veterans Affairs that allow for both the purchase and renovation of a home (with some restrictions, like using a VA-approved contractor). And Home Style loans guaranteed by Fannie Mae allow for improvements to be financed into a loan – even “luxury” improvements like swimming pools.
Talk to a quality mortgage lender about your financing options. You may find that a certain type of loan makes your fixer-upper project much easier.
2. Understand Your Skills
Not every homebuyer is handy. While some buyers may feel comfortable texturing drywall, installing fences and replacing light fixtures, others may not have the skills or experience to participate in a home renovation. It’s important to understand your skills (and limitations) before you make a purchase.
Why is this important? Because everything you can’t do will require a contractor or a handyman. Hiring out every little portion of a fixer-upper project increases the cost. Yes, you still pay for materials when you do it yourself – but you save a ton on labor.
3. Know Your Budget
Before you start making offers on homes, you need a firm idea of what your budget is for a given property. Again, think about what you can do yourself and what will require professional help. Then get bids from various contractors so you know exactly what the cost will be.
The classic renovation story is one of budget overruns and missed deadlines. But it doesn’t have to be that way. If you put in the work upfront to seriously and realistically evaluate the cost of repairing and renovating a home the way you want, you won’t be surprised by higher costs and longer timelines after your project begins.
4. Inspect With Care
Traditional home inspections check a property’s major systems and general condition. They cost $350-$400 in most cases. When purchasing a fixer-upper, you may want to get more intensive and more specific inspections.
For example, you can pay extra for a pest inspection, a sewer line inspection, a roof certification, an engineering report and an air quality evaluation. Each of these inspections, reports and evaluations increases the amount of money you pay upfront – but these additional services can give you greater confidence as you move forward with the purchase of a fixer-upper.
5. Be Patient
It’s easy to say and tough to do for anyone searching for a new home: Be patient. It’s even harder when you’re looking for the right fixer-upper.
You need to be patient before you make a purchase. It could take months to find the fixer-upper that’s in the right condition and that offers the right bones to meet your needs. You’re likely to look at several properties before you find the perfect home for you.
And you need to be patient after you make a purchase, too. It takes time to complete do-it-yourself updates, and it takes even longer when you’re relying on contractors to complete your updates. Again, most homeowners going through improvement projects grow frustrated by how long things take. Be realistic going into a project about how much the improvements will cost and how long they will take, and you’ll be much happier during the process. It all requires patience.
Buying a home is always a stressful and time-consuming process that can and should ultimately be rewarding. If you’re considering a fixer-upper for your next home, I’m here to help. I can connect you with lenders to assist with financing, and I can also help you evaluate fixer-upper options in your area. To get started, email me at pthessen1@gmail.com.
-by Perry Thessen
