IN Brentwood-Baldwin-Whitehall Spring 2018 | Page 16

INDUSTRY INSIGHT
What to
Know Before
You Buy That
Fixer-Upper
INSURANCE
T
he idea of buying an older property and renovating it into your dream
home or a moneymaker is appealing to many people. But with that
excitement also comes a lot of potential problems.
It’s important that you know what you’re getting yourself into.
Before taking on a fixer-upper, consider if it’s the right type of property
for you and what it will actually take to renovate.
Decide what’s right for you
Pros and cons. While a lower sales price, potential for resale profit, and a
sense of personal satisfaction are certainly possible, there can also be a lot of
unseen costs associated with buying a home that needs repair.
Patience is required. Depending on the size of the renovation, a fixer-upper
can take anywhere from a month to more than a year to complete. Be aware
that you and your family’s lives may be disrupted for a significant amount of
time. If this doesn’t work for your lifestyle, it’s best to think about a different
type of property.
Money. Renovations can be very costly. If you won’t have much money left
over for renovations after your down payment and closing costs, you may
want to consider a house you can live in while it’s being fixed up. Whatever
you decide, remember that there will be extra expenses no matter how
carefully you plan.
What to consider when looking
Location, location, location. It’s the golden rule of real estate and also
applies to fixer-uppers. Do your research. Check average home prices and
schools in the area. Take a stroll around the neighborhood to see if the homes
are well maintained. Buying the worst house on the best block that you can
afford can be a great option.
Condition. This can vary widely from a house requiring cosmetic repairs to a
total gut rehab. If you want to minimize renovation costs, look for a home that
has ‘good bones’—a solid roof and foundation, natural light, good floor plan,
quality construction, and a coherent design.
Layout. Many older homes are chopped up into several rooms and their
layout may not work for you. While it is certainly possible to knock down walls
and rearrange the floor plan, it can sometimes be expensive or impractical.
Keep this in mind when thinking about your renovation budget.
Configuration. Search for houses that have the approximate square feet
and number of bedrooms and bathrooms you desire. While it is possible to
add these things when renovating, they can really add up, especially if you
expand the footprint of a house.
Repairs and remodeling
Budgeting. When considering a property, a fixer-upper calculator can
help you get started with a rough estimate of renovation costs. A reputable
contractor can also assist in the process.
Minor renovations. Add up how many will be needed. These can include:
• Installing new or
• Installing light fixtures
• Patching and
refacing existing
and switches
painting walls
kitchen cabinets
• Fixing broken windows
• Refinishing floors
• Adding a deck
• Laying tile or carpet
• Replacing doors
• Painting the exterior
Major renovations. Tally up how many of these will be necessary. These can
include:
• Installing new
• Kitchen and bath
• Replacing HVAC
remodels
plumbing, sewer
systems or adding
• Building garages
lines, or wiring
central air
and additions
• Replacement windows
• Fixing foundations
• Replacing the roof
14
724.942.0940 TO ADVERTISE
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Financing
Federal Housing Administration offers a 203k loan that allows borrowers to
purchase a property while also financing the cost of rehabilitation.
Don’t over-improve
Consider how adjacent houses have been finished. If most have lower-end
finishings, it’s probably not best to spend your money on granite countertops,
copper bathroom fixtures, and marble floors. Your fixer-upper should be
in line with — or just slightly above — the standards of homes in your
neighborhood.
Purchasing a home is probably one of the biggest decisions you’ll ever
make. And while it may seem overwhelming, a fixer-upper can be a great way
to get good value for your money. Do your homework, talk to professionals
you trust, and make a smart, informed decision.