First-Time Homebuyers & Fixer-Uppers
What Every First-Time Homeowner Should Know About Purchasing a Fixer-Upper
Guest post by Bret Engle.
Bret Engle is an architect and co-creator along with Ray Flynn of DIYguys.net. He and Ray are co-authors of the upcoming book, How to DIY Damn Near Everything, which features Ray and Bret’s best tips based on their years of collaborating on DIY projects.
There are many reasons to consider purchasing a fixer-upper, but if you’re a first-time (or fifth-time) homeowner, thinking it will be easy shouldn’t be one of them. It’s rare that any house truly meets all design and aesthetic needs without having to make a few changes, but the process is all the more complex when choosing a property that may have serious structural damage, too. So, before signing on the dotted line, make sure you know what you’re getting into so you don’t have any functional or financial surprises.
The Buying Process
The first step is to research properties in the area where you want to live — the average listing price for a fixer-upper home in Meridian, Idaho, is $265,000. When looking at various homes, there are several factors to consider. For example, be prepared to put sweat equity into home projects if you want to save money, don’t overlook exterior work needs, secure financing before falling in love with a home you can’t afford to fix up, and don’t spend every dollar you’re approved for. You’re going to want to hire a contractor to conduct a thorough assessment of any home you’re serious about purchasing, because if a pro detects too many costly issues (think structural damage, mold, termites), it may be better to pass.
You should also assess the true cost of your fixer-upper to determine whether or not you’d be better off purchasing an abode that’s in better shape.
Decide which projects you can do yourself and which should be left to a pro
Price the cost of all renovations before making an offer — including anything found by an inspector
Tally up permit costs
Double check the cost of any structural damage costs from an inspector (this could be extremely costly if inaccurate)
Gather all of your financing costs
Determine your fair purchase offer
For any projects you’re tackling on your own, make sure you have the right power tools (think drills, sanders, jigsaws, etc.) to get the job done efficiently and safely. While DIY projects are only limited by your expertise and comfort level, the most common tasks include: fixing broken windows, replacing doors, painting cabinets, refinishing floors, laying tile or carpet, installing ceiling fans or light fixtures, painting the walls or exterior, stripping (or adding) wallpaper, adding curb appeal (think light landscaping, adding a deck), and embellishing with crown molding.
Any projects that compromise your safety, are beyond your area of expertise, or require permits and licenses should be left to a pro. This includes, but is not limited to, taking down a wall, replacing HVAC systems or adding central air, major roof repair, shoring up foundations, replacing plumbing, pouring concrete (think sidewalk, driveway, stairs), complete kitchen and bath remodels, complicated electrical work, and home or garage additions.
It’s a good idea to have an idea of whether or not you’re going to keep your newly-remodeled home for awhile or flip it to try to turn a profit. Keep in mind that the more people you have involved, the less money you’ll make. When making repairs or upgrades, think locally and utilize materials and a style that fits the neighborhood so it’s easier to sell — but don’t go crazy. If you invest too much money into the home, it can make it difficult to sell, thus making potential buyers skeptical if it’s been on the market too long. One of the biggest mistakes newbies can make is getting ahead of themselves. Don’t think about dumping money into your next flip until you’ve successfully sold your current fixer-upper, or you’re liable to go bankrupt.