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What to Know Before Buying an Old Fixer-Upper
What to Know Before Buying an Old Fixer-Upper
Everyone trying to buy a house now knows the market is red hot. That means competitive bidding on the best properties for sale. Those unable or unwilling to pay the most dough for the deed are left looking for options. The process continues until they either get lucky or get over their concerns about overpaying.
But what if there were a third option? Many aspiring homeowners are turning to seemingly less-desirable addresses in hopes of landing a great deal on a diamond in the rough.
In most instances, these properties are older homes in older neighborhoods. Unless the previous owner(s) kept up on maintenance and repairs, new owners would have their work cut out for them. Indeed, turning an old fixer-upper into a beautifully renovated home is an ambitious but potentially risky endeavor. Those who choose this path but fail to appreciate what it takes could easily end up like the couple in The Money Pit.
While every fixer-upper project is different, the following are seven questions to answer before buying one with the goal of making it your home:
Why this property?
Take time to know what it is about this old house that makes it the property you want to purchase. Is it the neighborhood? The architecture? The history? The price in contrast to the school district? It could be one of these, several of them, or another reason entirely. The important thing is to know the reason before going forward. It’s a simple but crucial step that applies to any major life purchase.
What are you getting yourself into?
You can’t predict everything (see below), but we can all do our best to prepare ourselves for what lies ahead. With this in mind, it’s essential for those thinking about buying an old fixer-upper to know the scope of the renovations required. These upgrades must not only meet all applicable building code standards but make the dwelling a safe and comfortable place to live. Speak with construction experts and other professionals to get a sense of what you’re about to get yourself into before agreeing to buy an old house in need of repair.
Who can you trust?
We’re willing to bet you aren’t Bob Vila or otherwise equipped with the skills and expertise to renovate and remodel an old house. That means you’ll need a small army of contractors to help get the job done. With so many options out there, getting your hands on a list of qualified experts is ideal. For example, the network of contractors found through Networx leads and reviews consists of certified professionals across more than a dozen specialties ranging from air conditioning to tiling. While you can always count on old Uncle Joe or your part-time handyman friend (we all have one) to help with minor projects – or even do them yourself thanks to online tutorials – the major stuff is best left to experienced experts. Finding a team you can trust will be crucial.
What are you prepared to spend?
Between the scope of the renovation and the cost of the labor required to make it happen, buying a fixer-upper can end up becoming as expensive as buying a brand new house. Crunching the numbers to determine what you’re prepared to spend will determine if the property is worth buying.
Where will you get the money?
Nearly the entire real estate industry relies on financing. With this in mind, it’s no surprise you’ll get most of the money needed to fix an old house through loans. If you’re willing to borrow it, then the question is will you be able to do so? Banks don’t hand out huge loans to anyone. Determine the source of your investment capital before deciding if buying a fixer-upper is the right choice.
What happens if…?
As mentioned earlier, there’s no way to predict every precise detail about a home renovation project, especially if the property is over a century old. But having an idea of the range of possibilities – no matter how seemingly remote – could prove crucial down the line. Take time to map out potential developments as the project unfolds. Having a preconceived sense of what to do can save time and money.
Will it be worth it?
It all boils down to deciding whether or not the investment is worth all of the above. More times than not, an appreciation for the home's historical significance and the surrounding neighborhood will be imperative. But that’s not enough to justify a boondoggle of a home improvement project. The passion for preservation must stay balanced with the practicalities of the purchase.
When homes are getting sold for record prices because of record demand, many aspiring homeowners see value in buying old fixer-uppers. While seeing “good bones” is the first indicator of an old home’s potential, it’s only the beginning. Knowing the who, what, where, and why regarding your interest in buying such a house will decide whether it’s an endeavor worth the effort or not.