Considering a Fixer Upper?
Buying a fixer upper is sometimes a great alternative to a move-in ready home. You typically buy the property cheaper than if it was fixed up and you gain sweat equity in the home. But, before you start looking for your next project, there are 5 questions you need to answer before pinning project ideas to your Pinterest board.
Who – What – When – Where – How
How will you be financing the purchase and rehab? When getting a loan for a property, the bank will require the home to be in a certain condition. Typically, federally backed mortgages (like FHA, VA, or USDA) have more strict guidelines on what condition the home needs to be in. Working lights, outlets, faucets, and windows that open are just a few requirements they typically have.
Conventional financing typically has less requirements for the condition of the property, but also may require a larger down payment. Check out our other videos to learn more about different loan programs. And, reach out to your agent and lender to determine what is the best option for you.
Who’s going to do the work? Will you hire a general contractor? Sub out the work to qualified contractors like electricians and plumbers? What do you feel comfortable doing yourself? Youtube is a great teacher and you can learn how to do just about anything. But what do you feel comfortable doing? Just some questions to think about before buying a project. And, your agent can help guide you to the right contractor or decision that’s best for you and your situation.
What level of fixing or updating do you want to do? Some buyers feel comfortable painting, while others want to do a gut Reno of the kitchen. It’s important to figure out what level of fixing you want to do and stick to it.
When are you going to do it? Will you buy the home and fix it up before you move in? Or will you fix it up while living in it?
If living in the fixer upper, make sure to take the scope of work and determine how it will affect your every day life. I have a friend who was updating her kitchen and had to wash dishes in her bathtub. Just be sure to think how you use the space that’s going to be a construction zone and how it impacts your daily life. You also should determine when you’ll do the updating. Right when you move in or later down the road? When Jenna and I moved into our place, we said we’d patch drywall holes and paint parts of the home. Guess what we haven’t done in 6 months of living here? That’s right, paint. Life is busy! And so set clear and realistic expectations on when you’ll get the work done.
Where are you buying the home and will the level of renovation produce a positive return on investment or negative? Your realtor is a great resource! Talk with them about how the home will change and the kind of finishes you’ll be putting in your home. Your agent can share with you what other homes in the area look like and what return to expect when you go to sell your home in the future.
Buying a fixer upper can be a tremendous opportunity! You’ll buy your home at a slight discount than if it was updated, gain sweat equity, and get to design your home the way you want. But, there’s lots of questions to answer as well!
Please reach out to us with any questions you have about the home buying process or how to best capitalize on one of your biggest investments, your home. Myself, and the rest of the Hartmann Home Team would love to help!