Fixer-upper: an affordable home in need of renovations
So, you’re contemplating the pros and cons of purchasing a fixer-upper versus a more pricey home that’s ready-to-go without any renovations. You have probably heard that renovations are a lot of work, but how do you know if it’s worth the reward? To make sure you’re not biting off more than you can chew, here are a few crucial questions you need to consider before deciding whether or not a fixer-upper is right for you.
How does your renovation budget compare to how much work is needed?
One of the main reasons people purchase fixer-uppers is to save money, but ironically many people end up going over budget. This is why your first step will be to take the cost of the house and add on how much the renovations will cost. The renovation estimate should be carefully calculated based on the needs of the specific house plus the services needed to complete the work. Some houses will need more work than others, leaving less room in the purchasing budget and visa versa. If you have ever watched any kind of house-flipping or renovation show, you will notice that something always goes wrong adding additional costs, which is why it is important to include a contingency plan and have some money set aside for any unfortunate surprises. This is especially true for older houses. If you plan on tearing down walls and messing with the structure of the home, be sure to leave extra room in your budget.
Do you plan on hiring workers or doing it yourself?
Along with the materials, renovation also requires the costs of labor. You will most likely need a home inspector, contractor, plumber, and electrician. Complex projects may even require architects and designers. Even if you decide to go the ‘do-it-yourself’ route, you will need to call in an expert every once in a while. Without an understanding of the structure of the house you may put yourself and your investment in danger. For example, you cannot go tearing down walls without understanding which ones are load-bearing, keeping the home structurally sound. Also, construction must be done according to the laws and neighborhood rules. If construction is not up to code you could be fined or even required to change it back. This is why even if you plan on doing a lot of the work yourself, it is financially worth it to hire the professionals when needed. These costs will add up, so make sure to include this in your budget.
Are you able to pay two mortgages or do you have somewhere else to stay?
During the renovations, where are you going to live? If you choose to stay in your current home, you need to be prepared to pay for two mortgages. Many people decide to stay with family or friends, which is a more cost-effective solution. However, be sure that the person you are staying with knows the duration of the project and will be willing to let you stay if the project schedule is extended. If you choose to go ahead and move into the home, make sure it is safe. Living in a house undergoing renovations is not typically a safe plan if you have kids or pets. Whatever your sleeping arrangements are, be prepared and make a plan for if the project goes on longer than expected.
Is there a strict deadline for the completion of the project?
If you have a strict deadline, such as a baby on-the-way or no place to stay after a certain date, you may want to reconsider purchasing a fixer-upper, or at least give yourself a few extra months in the schedule. Renovations take time and there is rarely a renovation with no surprises. Make sure you do not stress yourself out by being on a strict, inflexible timeline. Plan for success by giving yourself a few extra months to make sure everything is taken care of. If you finish early- great!
After considering all of these questions you should have a better idea if you are ready for a fixer-upper. There are no ‘right or wrong’ answers. Write out your renovation plan, create a budget and schedule, and look at the amount of time and energy it will take. If you are happy with your plan- go for it! Purchasing a fixer-upper can be a great investment if done correctly. Just be sure you are prepared and understand that it’s no easy task!