If you’re about to buy a home, like many other homebuyers, you may be considering a fixer-upper. These types of homes need a lot of work, but they are also priced accordingly. There are a lot of advantages to buying a fixer-upper. Not only can you customize the home to your liking, but the lower initial sale price could mean buying a bigger home that you wouldn’t normally be able to afford, or buying a home in an area that would be otherwise be unaffordable. Whether you plan on customizing a fixer-upper and turning it into your dream home, or fixing up the home and flipping it for a profit, there are some things to consider before you decide to make the purchase:
You may not be able to fix everything
Even though you’re buying a home that needs a lot of extra attention, it is still imperative to get a home inspection before you sign on the dotted line. Not everything that is wrong with a home can be repaired, and a home inspection could potentially uncover issues that you don’t want to deal with. You may discover that the home has some serious problems that will cost a lot of money to fix, or that there are structural issues that are so bad, they can’t be repaired. It’s one thing if you need to fix aesthetics, but fixing a home’s functional issues? You may want to keep looking, because the last thing you want is to buy a home that will just turn into a money pit.
Plan to spend more than you’re budgeting for
You may have a specific home remodeling budget set aside, but it’s important to have some wiggle room in that budget. Even if a home inspection doesn’t reveal any serious issues, it’s not uncommon for things to go wrong during a remodeling project and for things to end up costing a lot more than anticipated. Whether you need to spend more money on materials, or labor costs end up being a lot higher than you planned, you want to budget for these unexpected expenses. Additionally, things can always go wrong with the home years later, and these could be things that a home inspector couldn’t have anticipated. This is especially common with much older homes, so you’ll always want to be financially prepared.
It may not be worth the trouble
When homebuyers purchase fixer-uppers, they often do so because the idea of fixing up an older home seems like fun. They look at the various projects as something they would genuinely enjoy doing, and don’t really consider it work. And while home renovations can be fun, sometimes, they just turn out to be huge hassles. They can take longer than expected, and as a result of any delays, you may not be able to move in when you thought you would be able to. And because remodeling projects can end up costing a lot more than anticipated, the overall process can be frustrating. If something else keeps popping up that needs to be fixed, it can seem like a never-ending ordeal.
Make sure you’re getting a good deal
You found a home with what appears to have potential, the price is good, and it’s in a great area. But don’t make an offer right away until you know that you’re actually getting a good deal. You want to make sure you’re actually making a good investment when you purchase a fixer-upper, and that the home is priced accordingly. Research the real estate market in the area you’re buying; ensure that the property you’d be purchasing, while taking it’s size, condition, and area into consideration, is a great bargain. Not only do you need to factor in the sale price, but you need to consider the costs for remodeling, unexpected expenses, and all the time it will take to fix up the home. In the end, the home should be worth the same (or more) than neighboring properties.
Do you want to buy a home, but need extra money for your down payment? Peachtree may be able to help if you’re receiving structured settlement payments. Contact us today to learn more about selling future payments and receiving your money sooner in one lump sum.
Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.