Are you thinking about buying a fixer-upper, but don’t want to get in over your head? Fixer-uppers are generally sold “as-is” and require lots of TLC. It’s a completely different ball-game because you really don’t know exactly what you’re getting.
If a property is in bad shape it’s safe to say that it wasn’t very well cared for by the last residents or it’s been left to disintegrate for far too long. This isn’t always the case as there are also plenty of properties that fall into the “fixer-upper” category and have been very well cared for. They just simply look dated- as if they’re stuck in the 1980s.
There is a great deal of accomplishment that goes into reviving a home. It’s very rewarding to see a house go from shambles to looking brand new, but you need to be ready for the road ahead before you commit.
For those who are taking on their first project property, there are a few things you need to know and with the help of your realtor and contractor you’ll be able to get a clear picture of what needs to be done to renovate the home.
Your realtor is the first person you need to confide in. They are responsible for helping you get a fair deal on a property so that the renovations don’t posh you over the edge, leaving you with a home that’s worth less than you’ve invested. Sit down with your realtor and look at comparables. Together you can figure out how much wiggle-room you have.
Next meet with your contractor. They will be able to give you the clearest breakdown of what the home needs as far as repairs go. Ask your contractor these three very important questions: “What are the hidden costs?”, “What repairs need to be made to the home’s major systems (electrical, plumbing, etc.)?” and “What will be my total investment?”
Let’s say for instance that your contractor estimates the renovations will cost $65,000. Remember that this is an estimate. There will likely be hidden expenses along the way. If the home is listed at $115,000 and the comparables range from high 100s to low 200s you know how much wiggle-room you have. Ideally you’ll want to add the cost of the home with the renovation costs and come in below the area’s comparables. This will give you a return on your investment if and when you decide to sell.
Now, before you jump into the world of fixer-uppers ask yourself this… “I’m I willing to invest time, money and energy into a project that will require a whole lot of each?”