Buying a fixer-upper can cost a lot more than the ‘cheap’ purchase price of the home. You have to figure in the costs of the renovations to make the home sell. Whether you buy a home that doesn’t even meet the city code or you buy one that just needs a little renovating, you should know the full cost of the renovations before you make a decision.
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That’s not all you need to figure, though. Below are six questions you should ask before you decide if a fixer-upper is right for you.
Is the Home in a Historic District?
This might seem like a funny first question, but it affects your finances so it’s important. If the home is in a historic district, you have to answer to more than yourself for the renovations. You may have to consult with and get approval from the city or county.
Historic homes usually have costly features including stained windows and incredible crown moldings. All of the renovations could be quite expensive, not to mention the permits and other fees the city/county may charge you. If a home is in a historic district, make sure you know the full implication of renovating it before you decide to purchase.
What’s the Neighborhood Like?
When you buy a home, you buy into a neighborhood. Unfortunately, that neighborhood has an impact on the home’s value. No matter how nicely you renovate a home, if it’s in a ‘bad’ neighborhood or there are a lot of foreclosures in the area, the home’s value will only increase a little bit.
Ask the realtor or even the current neighbors about the area. Ask about the number of foreclosures. You can even research recent sales in the area to see how much neighboring homes sell for as well as how long they stayed on the market. If the neighborhood isn’t profitable, chances are the home you want to buy won’t be profitable either.
What Major Renovations Does the Home Need?
Put cosmetic renovations aside for the moment – it doesn’t matter if the home is a total eyesore. What matters is the status of the main features of the home. Is the roof stable? Do the utilities work? Is the electrical wiring up to code? Your inspector can tell you about these features and what to expect.
If the inspector says the roof needs replacing, the wiring is completely out of date, and the plumbing needs work, you are in for some major expenses. You might be fine with this, but you should know upfront what the home needs so you can properly budget. If you were looking for a home that just needed cosmetic work that you could do yourself, this home wouldn’t be the best choice for you.
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Are the Home’s Foundational Features Stable?
Foundational features are things like the foundation, obviously, as well as the doors and windows. If the foundation isn’t stable or needs repairs, it can be costly. The same is true for replacing windows and doors. If you purchase a home with a lot of windows, each of which that are leaking and need repairs, you may be in for an expensive renovation that you may want to avoid.
Is the Layout Functional?
You can’t change the layout of a home without doing major renovations. Take a close look at the layout to see if it’s something you would like. If you will flip the home to make a profit, consider the needs of people that generally move to the area.
Is the area very family oriented? Then think of families with kids. Would they be comfortable in the current layout? If it’s an older community with empty nesters moving in, is the layout feasible for aging homeowners? Again, you want to make your decision based on the area, not just the home itself.
What Will it Cost to Renovate?
Once you know the full condition of the home and what renovations you need/want to make, you can talk to contractors to see what it will cost to renovate the home. You can then compare these estimates to your budget to see if the fixer-upper is the right choice for you.
Fixer-uppers aren’t always a gold mine. There can be hidden problems or expensive repairs you have to make just to make the home livable. This doesn’t even account for any cosmetic changes you may want to make. Before you buy a fixer-upper, consider the above questions and their answers to make your decision.
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