If you’re considering purchasing a home sometime soon, but everything that interests you seems to be out of your price range, then you might consider buying a home that needs a little bit of TLC instead of something perfect and move-in ready.
Fixer-upper homes can be a great financial deal, but they can also turn into money pits if you’re not careful. If your new pet project has more issues than meet the eye, you may end up regretting your decision to polish a diamond in the rough. So what criteria should you use when evaluating a fixer-upper?
1. A Solid Inspection
First things first: any fixer-upper you’re considering purchasing should have a solid inspection long before you sign on the proverbial dotted line. If you’re looking at an older home (which many fixer-uppers are), then make sure you hire an inspector who has experience evaluating vintage housing stock.
Give every corner of the home a thorough going-over, even if that means hiring multiple inspectors to check for termites, chimney issues, radon, structural issues, and anything else that could be a deal breaker. It could turn out that the issues are mainly cosmetic, or you could end up finding out that the home has more issues than you’re prepared to take on. Either way, inspections are always a worthwhile investment.
2. Structural Integrity
Structural issues are not to be taken lightly. The last thing you want is to have your new home blown over by a strong wind. That’s a bit of an exaggeration, but buying a home that’s ready to collapse at any moment is not a smart move. Make sure your fixer-upper has good bones.
3. Reasonable Asking Price
Once you have a clear picture of what it’s going to take to bring your project to fruition, you’ll have a better idea of how much you should offer for the home. Generally speaking, the asking price should leave plenty of room for repairs and upgrades, relative to market value of similar homes in excellent condition. If not, save yourself the trouble and look for a home that’s in better shape.
4. Real Potential
Low prices are the main draw for fixer-upper homes, but there’s no point in taking up a lost cause just because the price is reasonable. If you’re going to invest the time, energy, and money into rehabilitating a home, make sure it’s worth saving. Does it have gobs of charm? Architectural significance? Old-world craftsmanship? The secret sauce that makes a fixer-upper worth buying will be different for everyone. Visualize the finished product and what it will take to get there. Is it worth the trouble? If not, pass.
5. A Good Return on Investment
Earlier, we talked about finding a fixer-upper with a reasonable asking price. Assuming you’re planning on making your project house a home, you want to avoid owing more than it’s worth when all is said and done. If you’re planning on flipping your fixer-upper, then you’ll definitely want to crunch the numbers. When the process is over, will the estimated sale price cover your costs and provide you with a worthwhile profit? It had better, or you could end up losing lots of time and money.
6. A Sound Electrical System
Outdated electrical wiring can be dangerous, and many reasonably priced elderly homes need attention in this department. Now, we’re not suggesting that bad wiring is an absolute deal breaker; most electrical work can be done DIY-style if you follow the proper precautions. However, you should know what you’re getting into and budget accordingly.
7. A Solid Foundation
Foundation issues are the bane of bargain hunters everywhere. Cracked foundations can lead to termite infestation, basement flooding, and Leaning Tower of Pisa-style structural issues. What’s more, they can be exorbitantly expensive to fix.
8. Good Plumbing
Antiquated plumbing can contribute to poor water quality, water leaks, and expensive repair bills. Again, you shouldn’t necessarily let plumbing issues dissuade you from purchasing a home, as it can be addressed if you have the budget or the know-how, but factor it into your overall costs.
Perhaps the most important thing your fixer-upper home should have is a dedicated owner. You can save a ton of money by learning how to fix things yourself. And yes, you’ll probably make a few rookie mistakes along the way, but as long as you do your homework, you might surprise yourself with just how handy you can be.
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Happy house hunting!