Buying your dream house has become more and more expensive. The good news is that instead of building one from scratch, you can buy a fixer-upper and turn it around.
Professionals in real estate learn how to see value in everything. In contrast, some properties might seem like useless and worn-down houses. Instead, professionals might see them as great fixer-upper opportunities.
With the rise in construction costs, buying and renovating have become more common, as many people have discovered that it is less stressful than dealing with the overall construction.
If you’re planning to buy a fixer-upper, but have no clue whether it’s worth it, you’ve come to the right place.
The truth about fixer-uppers is that they can be expensive if not done correctly. Aside from being expensive, they can also be very stressful compared to purchasing a brand-new property.
What are the risks of fixer-upper properties?
The main risk of fixer-upper properties is that you could spend more than your budget, some things might have to be renovated entirely, and your spending could exceed a comfortable price to sell the house at (should you want to flip).
Since everything in life entails risk, it is essential to find ways to minimize the risk of fixer-upper properties by following a solid routine.
A guide to buying a fixer-upper
When buying a fixer-upper, a few things should be followed. These steps cannot be skipped since they could result in more expenses later.
Make sure to inspect the property
Getting a home inspection will allow you to know exactly the problems with the property, how much they’d cost, or if they are worth fixing.
The sad truth about some fixer-upper properties is that sometimes the damage can be brutal to repair, making it more feasible for the buyer to choose another property.
Determine the renovation cost estimates
Instead of looking for just one contractor and going with it, get quotations from multiple contractors and sub-contractors on how much it would cost to fix your problems.
The best way to control your spending is by listing down the materials and labor costs while canvassing where you might be able to buy them at a discount. It’s also important to note that as a rule of thumb, you might want to prepare 30 percent over your budget just in case something goes wrong or you want something to be improved or upgraded.
Know what permits are needed
Different types of work require additional permits. You can ask your inspector or contractor what types of permits are needed to comply.
Before starting your construction, you or your contractor need to:
- First, go to the municipal government.
- Show them the plans.
- Apply for the correct permits so you can get started.
What fixes can be DIY
Not everything needs professional help. However, if certain aspects of the repairs and renovations are do-it-yourself (DIY), opt to do them to help save on labor costs.
These fixes include painting, cleaning, and other non-skilled tasks.
Negotiate for a reasonable price
The thing not a lot of people know about construction is that there is still room for negotiation. When a contractor gives you a quotation, this usually includes wiggle room for negotiation.
Start by asking for a discount on just one task and how much value they would give if you had them do multiple tasks.
Is it worth it?
The answer is usually yes, but this still depends on the buyer’s situation. If you already have a lot of money and don’t mind spending more to get a property you want, buying a fixer-upper might not be worth it.
Buying a fixer-upper is worth it when you want to save money, get your ideal results, and don’t mind trading time for savings.
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