Buying a fixer-upper requires taking super close look—at everything.
It looks so easy and downright romantic on television: a prospective home buyer spots an ugly house with good bones and buys it. With a little elbow grease and help from some pros, the space is transformed into a dream home. But making that dream come to life is a little harder than it looks. When it comes to shopping for a home, there’s a fine line between a buying a fixer-upper and ending up with a money pit.
If you fix up a dumpy house in a neighborhood where all the houses are dumpy, you’re not going to get as much return on your investment as you will renovating the one eyesore in a nice neighborhood. When thinking about buying a fixer-upper, consider if the home’s location adds value to the property. Your real estate agent can be a big help in determining the value of a home’s location.
Evaluate needed repairs.
Peeling paint and ugly carpet are easy fixes. But moving load-bearing walls and removing hazardous materials like asbestos? Those jobs really add up. If you’re buying a fixer-upper, do a visual inventory of the work you would do to the place in the first few years. If more projects fall into the “major job” category, it might be more trouble than it’s worth.
Factor repairs into your budget.
Now that you have a list of needed repairs, price out each project. While the sticker price on the home may be a great bargain, your true cost is the sale price plus the work you need to do in the first few years.
Make sure you have room in your budget for both your mortgage and the cost of the work. Be conservative in your decisions about what you can DIY and which jobs will require a contractor. A pro should address things like replacing an HVAC system, foundation work, electrical work, plumbing, and more.
Get specialized inspections.
You’re not going to be able to identify all of a fixer-upper’s issues yourself. Even a regular home inspector won’t check some of the major systems that can cause problems in a home that needs a lot of help. Here are some of the specialized inspections to consider:
- Structural Engineering Evaluation: A crack in a basement wall can mean anything from harmless house settling to structural problems that could be a deal-breaker. Foundation repair costs can be huge, and not addressing a foundation problem is unsafe.
- Sewer Line Inspection: Sewage systems age along with the home. Make sure yours isn’t teetering on the edge.
- Pest Inspection: Ants, termites, bees, and beetles can all wreak havoc on a house. If an inspection turns up an infestation, you can ask the seller to pay for the fix.
- Roof Certification: If the roof on the home is not new, a roof certification serves as insurance for the seller. An inspection will determine the life left in the roof and certification guarantees the roof for up to five years.
Ready to find a great deal on a home by buying a fixer-upper? With these smart moves, you can make your homeownership dreams come true.