What First-Time Home Buyers Need to Keep in Mind When Considering a Fixer-Upper
Few things are as exciting as purchasing your first home. As you begin to shop around and see the potential in homes others may have missed, you might start to think that you can handle a fixer-upper. Make no mistake, renovating a fixer-upper is a lot of hard work, but can be incredibly rewarding. Still, there is a lot more to renovating than putting on a fresh coat of paint. If you’re eyeing a fixer-upper, Excellent Plumbing, Heating, & Mechanical offers the following advice.
Location is Everything
Whether you are planning on living in your fixer-upper or selling it after sprucing it up, location is key. The best fixer-uppers are located in nice areas. A good neighborhood will attract buyers. According to Trulia, factors like good schools, public transportation, nearby restaurants, and walkability are things to be on the lookout for when choosing an area to purchase a house in.
You can also use the surrounding homes to estimate what your home might sell for once it is fixed up. Keep in mind that most fixer-uppers sell for approximately 10 percent below market value, per Northwestern Mutual. With the average property running $501,138 in Colorado Springs, for instance, if you can somehow buy in a neighborhood right before it becomes trendy and all the home values rise, you’ll have hit the jackpot!
Build Your Budget
Even when you think you’ve found the perfect fixer-upper, do not put down an offer just yet. Before you do anything else, you need to estimate your renovation budget.
Hire an inspector to take a look at the structural elements of the house, and be prepared to repair anything they find. Most inspectors will warn against buying anything that requires a major repair, such as resetting the foundation or roof replacement, as these repairs will eat up your budget quickly. No home is perfect, and a report could easily include a plethora of issues. Accompany your home inspector to learn which issues are the most serious.
DIY-ing is a great way to save money, but make sure you have the time, patience, skills, and tools (drills, sanders, power saws, etc.). Different projects require different things, and you might be more comfortable with some bells and whistles—for instance, a drill that tells you whether it has enough juice left for the job at hand might be worth investing in. Do not neglect to take into account permit costs and look into zoning laws, too, when calculating costs.
After you’ve calculated your renovation budget, double check to make sure you can still afford the home based on your annual income, down payment, monthly spending, loan type, and current APR. The last thing you want to do is come out in the red. As a first-time homebuyer you’re likely a good candidate for a PennyMac FHA loan, which is a great option for those with smaller down payments and a limited credit history, so be sure to look into this as well as other mortgage resources.
The Renovation Process
Once you’ve purchased your fixer-upper, the renovation fun can begin. As Young House Love recommends, tackle any large structural fixes first. Not only are these the most chaotic and messy projects, but you want to ensure that you can safely live in your new home, especially if you plan on being there during this process. In general, you want to tackle the big projects first and complete the smaller, cosmetic details last. You don’t want to paint your walls only to have them scratched up when you’re putting in new flooring. Be sure to also connect with local experts to confirm that your home systems are in working order. For example, an expert plumber can address plumbing repairs, water heater replacement and installation, while an electrician can tackle any necessary wiring repairs or create additional outlets.
Some people prefer to tackle the entire process at once by doing all the floors, then all the painting, then all the light fixtures. Others like to go room by room. If the latter is your preferred method, complete the bedroom first. This way, you will have a comfortable place to retreat to while the rest of the house is being worked on.
As you narrow in on the finer details of your home, determine if you want to stay in the house or sell it once you’re done. If you are staying, feel free to personalize it as much as you want. If you are selling, try to keep the design neutral to attract more buyers.
Your Dream Home
If you are up to the challenge, a fixer-upper may be the perfect home for you. It may be what allows you to live in a neighborhood you previously couldn’t afford, transform an ugly house into your dream home, or sell for a profit. The process can be difficult, but if done right, it will pay off.
Photo courtesy of Unsplash.