Just like you could strike gold with a fixer-upper, you may also end up with a complete lemon. To avoid any costly mistakes, it's crucial that you get everything right from the very beginning. You need to identify the right fixer-upper, have it inspected by the right people, and learn how to evaluate the repairs.
The following tips will help you get started;
Find the right fixer-upper
Most buyers, especially first-timers, want a home in pristine condition; a turnkey property that's ready for occupation. If you're interested in a fixer-upper, your job is to identify homes these people would overlook but can be fixed without too much trouble.
Two factors to prioritize are location and configuration. Never compromise when it comes to location. That ugly duckling must still be in a desirable neighborhood or fast-developing area. As for configuration, the best fixer-uppers are those that will appeal to a larger pool of buyers. Two and three-bedroom houses with at least two baths are, therefore, the best candidates. A popular floor plan is also essential.
Evaluate the condition of the property
Fixer-uppers come in all shapes. While some are good houses needing just a few fixes, some are often in dire, near-irreparable conditions. The trick to finding a good deal is to know how to spot easy, simple repairs vs costly ones.
Easy fixes include; patching walls, painting, refinishing floors, installing ceiling fans, replacing baseboards, adding trim, fixing broken windows, replacing bathroom subfloors, replacing doors, replacing light switches, and possibly adding a deck. Expensive fixes, meanwhile, include; replacing the HVAC system, building garages or additions, complete kitchen/bathroom remodels, replacing plumbing, fixing the foundation, and reroofing.
Plan for inspections
Before you even consider paying for the property, you should have an accredited home inspector look at it to uncover any underlying issues.
Some of the inspections you will want to schedule include; roof certification to evaluate the age and condition of the roof, pest inspection, sewer line inspection, and engineering inspections to determine potential contaminations and detrimental resale hazards. It's also wise to get a home warranty.
Estimate total repair + permit costs
After the inspections are done, you can now determine the total repair costs. There are several online calculators to help you easily estimate the cost of home repairs. For a more accurate estimate, though, hire a contractor. After a walk-through and, taking into consideration the inspection reports, the contractor will be able to give you a quote on all the repairs. Ensure you have a binding, written estimate on these before you make an offer. Permit costs are straightforward and can be found online or by calling the permit office.
One more thing – always adjust the final estimate upwards by 10-20% to cover any unexpected expenses and issues that may be found while repairs are happening.
At this point, you should have a good idea of how much the fixer-upper project is going to cost you. However, it's possible that you don't have enough cash saved up to cover all the costs. So, you will need to get a loan for both the house and repairs.
One of the best loans for this type of investment is section 203k mortgages that are specifically designated for house buying and restoration. The loans are backed by the Federal Housing Administration (FHA), and thus have relatively low-interest rates. Also, they are even available to consumers with not-so-good credit ratings. However, there's a limit to how much you can borrow.
Now, Your Turn
The only other thing we want to mention is the commitment, both time and resource-wise. If you're going to be successful with a fixer-upper, you need to be invested in the property from the moment you buy it.
The Michael Stoltzfus Group is located in Lancaster, PA and serves the Lancaster County and Central Pennsylvania area. We work diligently to help home buyers and sellers like yourself achieve their home goals. With extensive experience and knowledge of the area, the real estate team at Michael Stoltzfus Group will provide friendly and professional support for your entire real estate transaction.
Contact us online where one of our professional team members will respond via email or call us today at 717-380-3367.