Many first-time homebuyers like the idea of buying a fixer-upper property. Sometimes, though, it’s because television shows like Good Bones or Flip or Flop have glamorized the idea, giving viewers somewhat unrealistic expectations of what they’ll encounter. While that doesn’t mean first-time homebuyers shouldn’t go down this road, being smart about it is essential. Here’s what first-time homebuyers really need to know before purchasing a fixer-upper.
Finding the Right House
First, you’ll want to look at price averages in individual neighborhoods. That way, you’ll know which properties are legitimately bargains in their area. Make sure to focus on finding comps based on what the property could be when fixed up. That way, you can see if it’s a potentially worthwhile investment.
Second, you’ll need to estimate how much you’ll have to spend on repairs or updates. Specific hidden issues can come with massive price tags, so you want to have a home inspection contingency and hire a top-notch home inspector who can examine those areas. Once you know what’s wrong, you’ll need to get quotes from licensed and bonded repair professionals, giving you an idea of what you’ll have to spend. With those numbers in hand, you can usually determine if a home is a reasonable deal. Just subtract what you’ll spend from the final value. The larger that number, the better.
Look into Home Warranties
Next, consider home warranty coverage for peace of mind, as a home warranty protects homeowners from unexpected repair costs for essential systems and appliances. This type of coverage can significantly reduce financial stress, as it covers the repair or replacement of items like heating systems, plumbing, and kitchen appliances. By providing a safety net, home warranties help homeowners avoid out-of-pocket expenses that can arise from unforeseen breakdowns.
Choosing Your Projects
After buying a property and getting renovation funds, you need to figure out which projects to tackle. Along with deciding whether to pay a professional or go the DIY route, you’ll need to determine which projects to handle first. Usually, your best bet is to get the home dried in first, so you’ll focus on the roof, exterior walls, and foundation. By making the structure functionally weatherproof, you ensure that leaks or similar issues won’t harm the interior. Since this is critical to a home’s integrity, you’ll want to hire licensed and insured professionals.
Kitchen and Bath
Once that’s addressed, focusing on habitability is often best. Getting a functional kitchen and bathroom means you could move into the home while other repairs are underway. To ensure work is finished promptly, it’s best to trust the work of professionals for your renovation plans. You can also work on exterior projects, such as adding a range hood to your kitchen. Also, don’t forget the home’s curb appeal. There’s no sense in pouring resources into the home itself if you’re going to neglect the landscape.
Deciding Whether to Stay or Move on to a New Home
After you finish the updates, you’ll need to decide if you want to remain in the property or profit from your efforts. If your goal was to create your dream home, and that’s what you did, staying in place could be worthwhile. If not – and the numbers are right – then an alternative like selling or renting could move you closer to your dream home.
Purchasing and flipping a fixer-upper can be a great way to gain financial freedom. From home warranties to renovations, just keep these tips in mind as you set out on your homebuying journey!
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