What to Know About Purchasing a Fixer-Upper
Do you know the most essential considerations when buying a fixer-upper home? Buying a fixer-upper is a great way to invest in real estate. When a home needs work, it can present you with the perfect opportunity to not only bring the property up to date but to truly make it yours.
Recently, buying a property that needs some love and attention has become increasingly popular. Not only is this a trend for, house flippers - those who fix up a house and then sell it, but also with end buyers as well.
That does not mean buying a fixer-upper is for everyone. You need to make sure you are not investing in a money pit and that you can access enough financing to fix it up the way you desire. The reference at Maximum Real Estate Exposure provides exceptional tips when getting involved with a fixer.
Have The House Professionally Inspected
Even those who have a building background can miss things when giving consideration to buying a property. It goes without saying that having a professional home inspection is critical. A licensed home inspector will go over every facet of the building, checking for significant structural and mechanical defects.
They can also check on things that a contractor might not be familiar with including the presence of mold, checking for passing radon levels, as well as testing the quality and quantity of the water among other things.
Having a second site of eyes is just smart. On the other hand, if you have no construction experience it goes without saying that waiving an inspection could be disastrous. Don't skip this essential step when buying a home that needs work.
Do You Have the Right Skill Set to Fix It Up?
Fixing up an unloved home is not for the fainthearted. It is not like you can just pack up your toothbrush and move in.
One of the first things you need to consider is if you have the right skills. If you can’t do the work on the property, do you have enough money to pay something else to do it?
Sure, you can apply for a renovation loan, but as you pay for renovations loans for a more extended period of time, they can potentially end up costing you a lot of money.
Is The Home Habitable?
If you can’t live in the property that you have just invested in, where are you going to live? Once you have spent all of your cash on the deposit, you need to consider the ongoing expenses.
When you know your fixer-upper is going to resemble a building site for the next six months to a year, you need to consider where you're going to call home. An essential consideration is going to be your daily living costs. Living expenses can quickly add extra charges to the project, and you need to work them into your budget.
Don’t bite off more than you can chew. Make sure you have the right skill set to do most of the work yourself.
Make Sure You Take Out the Right Mortgage
Finding the right mortgage is equally essential. There are a plethora of mortgages available for buyers of property that need fixing-up. Ultimately, it is about finding the right mortgage to suit your needs. Make sure you ask the lenders you're interviewing lots of questions.
The majority of lenders of this particular kind of mortgage only ask for a 3% down payment. That can help you out if you would like to budget for repairs. Make sure you shop around just as much as you would if you were considering investing in a turn-key property.
One thing that makes this particular home buying process unique is that you will more than likely have your lender watching your every move. Any lender will want to make sure their investment is safe, and you are fixing it up to an agreed standard.
Before you sign up for a mortgage or renovation loan, get in touch with a professional building contractor and ask them to give you an estimate for the work required. The more prep you have done, the easier you will find it to get hold of the cash to finance the work.
As a point of interest, make sure when financing any property that you have a strong understanding of relevant mortgage terms surrounding the purchase of a house.
Having the Right Skills to Fix-Up Properties
When you don’t have the right skills to fix up the property, it is a good idea to make sure you pay particular attention to the budget. Many homeowners are better off working and paying a contractor to do the work.
The advantage of employing a contractor is that the work will be done faster and perhaps even to a higher standard. Do you really have the time to spend every weekend working on the home?
Remember, certain types of renovation projects are more challenging than others. Unless you have considerable experience of repairing and fixing up plumbing and electrical wiring, you should not even attempt it.
A professional contractor can also help you with any building permits you might need. As a layman, you won't know your way around the local building department as a contract would. Getting proper permits is critical as it has become a significant topic of interest in real estate sales.
At the end of the process, your lender is likely to want to have copies of all building permissions. If the work has been completed by a professional, it is often easier to get it passed inspections.
Making the Home Environmentally Friendly
Planning should be one of your priorities. Consider building in and adding as many “green” and environmentally friendly ideas to your new home as possible. They will save you money in the long run and stop you from going over your work in years to come.
One of the hottest things in home building today is making our homes more environmentally friendly. In fact, having the right green systems in place can make your home easier to resell in the future.
If you are a first-time buyer, you might not be aware of the trend towards making a home more sustainable. Put this on your checklist when considering upgrades.
Buying a fixer-upper can be an excellent idea for many people, especially for those who are extremely handy. Remember, when a home needs work, it can be a fantastic investment. Those who can do the work themselves are rapidly building their sweat equity.
In the future, you may benefit more financially than you would have done if you had bought a turn-key home. For those who don't have a building background, make sure you hire the right contractors. Getting multiple bidders for work being done should be a key consideration before starting your project.
Hopefully, you now have a better understanding of what to think about when buying a fixer-upper house.