It takes willpower and a budget to invest in a fixer-upper home. You have to see the potential, weigh the pros and cons and see the project through to the end. Knowing when to buy and how to flip, can make a stressful project a breeze. How can you tell if a house is a gem worth saving? If you’ve got a DIY mindset, some patience and a few coins to spend, here are some considerations to make when you’re thinking of buying a rehab home.
Finding the Right Fixer-Upper
The best way to get a real estate bargain is to look where others aren’t. Vacant properties are great because in many cases the seller has simply moved out leaving their old home in decent condition. Finding older homes in established neighborhoods could also be a worthwhile investment. As long as you have the willingness to repair surface damage. Hiring the right agent can save you time if they know of any properties that are difficult to show. Those properties are your best friends when you’re looking for a fixer-upper!
Determining Your Home Desired Category
There are categories in place that can assist you when making an educated decision about the home you choose. Generally, fixer-upper properties can be categorized in 3 ways: a tear down, a cosmetic fixer or outdated and simply ugly. Becoming aware of the extensive repairs, remodeling and do it yourself projects needed to renovate the home, will tell you exactly where your fixer-upper falls. Knowing this will help you determine if this project will be worthwhile.
For tear downs, otherwise known as houses in distress, there are no warranties. Make sure a certified inspector looks over the property before you make an offer. You’ll need to be aware of how much it will cost to make the place habitable or flippable beforehand.
The Fixer-upper Checklist
Once you have determined the category of your fixer-upper, create a checklist. The checklist should have four key areas to review: location, configuration, layout and condition. Check these four areas off your list and make sure they work with your time and budget before making your purchase.
Things like location and layout are most important because there’s little room for modification here. Ideally, you want to inspect the surrounding homes and be sure the neighborhood matches your lifestyle. In terms of layout, most families prefer 3-bedroom home with more than one bath. With a bad floor plan tearing down walls and rebuilding becomes very costly.
Key Conditions to Consider
Minor cosmetic improvements are typically less costly and easier on your budget than a major renovation, but you won’t know what the home needs until you’ve had it thoroughly inspected. Here’s what you should be looking for:
- Membrane – Will the roof keep water out and the heat in?
- Electrical – Is property properly wired?
- Heating – What type of heat does the property use and is it sustainable?
- Doors and Windows – These repairs can get pricey. Determine if this will break the bank for you by getting a quote in advance
- Plumbing – Leaks and pressure issues are also top dollar to fix.
- Structure – Will your house stand up or is it subject to collapse over time?
- Foundation – Is the basement wet with cracks that will be a problem in the future?
If your potential home is requiring renovations you’re ready to take on, you may qualify for some financial backing from our bank! Since these home loans are backed by the government, banks are more likely to accept lower interest rates than what would be required by your typical home renovation loan. As your mortgage lender, we can find the best loan options for your needs.
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Vice President, Senior Mortgage Lender
NMLS MLO ID: 532621