Buying a fixer upper house is a challenge that can reap huge rewards, both financially and for personal satisfaction.
However, the problems that arise on a renovation project often take many people by surprise. Costs can rocket, timeframes perpetually extend, and it feels like it’ll never get finished.
Avoid making costly mistakes that eat away at your time as well as your finances. Make sure you’ve read this essential guide of things to consider before you take the leap to buy your first home renovation project.
Benefits of Buying a Fixer Upper House
Buying a rundown house seems a little scary at first. However, when you realize there are many benefits to buying a renovation project, the idea looks a lot more tempting.
Here are some of the key benefits of buying a house that needs some work.
Get Into a Good Neighborhood
Early steps on the property ladder usually involve the ‘bad neighborhood – cheap house’ payoff.
However, a renovation property means you’re more likely to be able to buy in a better neighborhood, close to amenities, schools, and work, with the same budget.
Buy a Larger Property for Your Budget
It’s not a guarantee, but you are also more likely to be able to skip over postage-stamp sized properties in favor of a larger one that needs more work.
If you want to move to a really expensive area, you may still be faced with a tiny property – but one that is in a good area AND will retain its value once renovated.
Put Your Own Mark on the Property
Move-in ready homes are great for families or professionals with little time to spend on their property.
However, they can be a bit formulaic and plain. A renovation project allows you to strip out the elements that you don’t like and add your own personal style instead.
Established Gardens and Character Properties in Your Budget
Properties in need of renovation have age on their side: character period features and established gardens are part of the package.
You won’t have to spend years waiting for your newly-planted garden to become a stunning feature, or for your just-planted hedge to provide privacy to your home.
Renovations Don’t Have to Involve the Entire House
If the idea of a whole-house renovation has put you off the idea of buying a project property, think again.
Many properties available under market value need only one large renovation, such as a new roof, while the rest of the house is in good condition. These properties offer huge potential for buyers seeking a bargain house without taking on a massive whole-property renovation project.
With properties like this, you can finance the repair required into your home loan with relative ease. It’s an attractive option for those seeking a larger family home or better neighborhood on a restricted budget. The finance and effort required are much less than a whole-house renovation, but you’ll still end up with a bargain property.
Huge Personal Satisfaction
Taking a rundown house and turning it into a property that you – and everyone else – adores is worth the time, stress, and money you pour into it.
The sense of personal satisfaction you’ll feel every time you come home to your completed project will be worth the effort you put in.
Ten Considerations Before You Buy a Renovation Project
Now you’re all revved up about the huge potential of buying a fixer upper property, and that’s great!
However, don’t go into such a commitment without doing your research first. Make sure you’ve thought through and seriously considered all of these things before you purchase your renovation project.
1. Speak to Experienced Renovators
Before you go anywhere near a new renovation project, seek out others who have already taken one on. Ask friends and family who created their dream home from a period property to give you the full lowdown of their experience.
If you don’t know anyone personally, look online at forums and social media groups to connect with people who have real-life experience. This will help to give you a realistic idea of the project, rather than the dream-fantasy that’s your current vision.
2. Budget Extra for Renovations
Always, always, always allow plenty of extra in your budget than you think you’re going to spend.
Period homes are guaranteed to have something lurking somewhere that takes more money and time to repair. You may need to redo the electrics or find rot has set into the eaves.
When you build your savings and apply for your mortgage, allow plenty of extra in the bank to accommodate unforeseen repairs.
3. Remember to Budget for Exteriors and Landscapes
Allocate a budget for landscaping and exterior renovations, too. It’s easy to forget that established trees may need professional trimming, or that your gutters need replacing.
When you view the property before you buy, take your time to conduct a thorough walk around the house as well as inside it. Make a detailed list of any repairs you notice in the gardens and house exterior, to help you create a realistic budget.
4. Set a Realistic Timeline
You might have visions of completing your project in a stunning 8-week-flat time period – but that’s unlikely to happen.
Delays are guaranteed on any renovation project. Out-of-stock parts, unexpected hidden repairs, and even weather conditions can all affect your time frame.
Add at least four weeks to your renovation schedule to help you to avoid frustration when the inevitable delays occur.
5. Plan Family Accommodations First
If your new property isn’t going to be habitable when you first buy it, make sure you have somewhere for your family to live for a couple of months. This could be your previous home, a short-term let, or a very good friend’s place.
Your health and wellbeing come ahead of any project, too. Living in dusty renovation conditions isn’t going to do anyone any good! Make sure that you have a ‘clean room’ to spend your downtime in around your project.
This will also help boost morale when the heating doesn’t work, the water is off, and the place feels like a dump. A clean room with home comforts is an ideal retreat and should be the first room you prepare before starting on any major renovations.
6. Source Local Contractor Quotes
Before you buy the property, arrange a viewing of the house with local contractors. You should line up a few meetings in a row, to make sure you receive a couple of quotes to compare and choose from.
Walk around the property with them and list the required works. Ask about their timeline, their availability, and of course, the cost.
This will help you to decide if your dream renovation project can be realistically completed using your savings and home loan funds.
7. Get an Independent Valuation
You should also seek an independent valuation from an expert. They should be able to tell you the current value of the property, and the expected value with standard renovations completed.
This is an important step: it helps you keep a fair budget in mind and makes sure you don’t overspend on a money pit.
8. Check Building Permit Requirements
If you think a new extension or major external changes will transform your project property, check all building permit requirements and regulation codes you need to apply for and adhere to before you start.
Take a look at other houses on the street. This will give you an idea of whether permits are likely to be granted, and the type of remodeling that works with similar period properties. Your loan provider may also have input on what they require to be repaired in order to meet strict terms of the loan.
The Department of Homeland and Urban Development may also send an inspector to view the property to make note of repairs that must be included to bring the house up to neighborhood standards. These repairs won’t be optional, so it’s essential that you account for them in your renovation budget.
If you need a building permit for any of your renovations, complete the paperwork as far in advance as possible to avoid delays. If you can, ask your contractor to check over the permit for accuracy to make sure your application goes smoothly.
9. Family Home, Become a Landlord, or Flip for Profit?
Before you start your renovation, consider what your end goal is. Do you want to create a forever home that you can pass to your great-grandchildren? Or is the appeal of a profit what you’re after?
This will affect how you budget for and approach your renovation project. A family home will need high-quality fittings and fixtures that’ll stand the test of time. A handcrafted wooden staircase, for example, may be a huge investment – but if it lasts generations it could be a worthwhile asset.
If you’re after a post-renovation profit, you have two options. You can keep the property and rent it out, or flip it for profit.
Whichever route you choose, you can let your business head lead the way. Don’t go for the cheapest fixtures and fittings, though, as this will show in the final finish. Quality is still best – but you can pick and choose the key quality features to entice prospective tenants or buyers.
10. Check Lender Requirements Before You Start
Most lenders will have seriously strict requirements when you borrow money for renovations.
Before you buy a fixer upper, it’s essential that you check the lender’s rules and provide evidence that you can meet their requirements before you take out the loan.
How to Fund Your Renovation Project
There’s no denying that buying a fixer upper house will require a significant amount of capital. However, you will reap the rewards on completion. You will either have a wonderful home in a great area on a small budget or be in a position to sell for a handy profit.
You’ll need to have plenty of capital in the bank to afford your house purchase, legal fees, building permit applications, and renovation costs. Once you’ve created a realistic budget, it’s time to look for a home loan that’ll help you achieve your dream.
Still not sure how you’ll fund your lifelong renovation dreams? Contact our expert team today to find out more about the best home loan for your fixer upper project.
I’d say if you’re aiming to get profit out of your property in a short time.
You make a good point when you mention how buying a fixer-upper will allow you to buy a larger house for your budget. I am planning on finding a home that is big enough for my family of 6, we hope to find a large house that will allow everyone to have their own personal space. It may be worth looking into fixer-upper houses so that we can get a large house for a reduced price.
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I very delighted to find this article about buying fixer-uppers.
I bought some good fixer-uppers before! Good investments!