Want a first home that you can truly call your own? Ready to put some muscle, mind, sweat, and cash into a piece of property that will have your distinctive stamp? Consider buying a fixer-upper, a house that needs more than just tender loving care and a fresh coat of paint.
Most fixer-uppers are sold in as-is condition, meaning that while they’re priced lower, the buyer is responsible for making any needed repairs. And the fixes these properties need are substantial, such as a new roof, new plumbing, new electric, new windows, reinforced wall frames and drywall, renovated bathrooms, new kitchen fixtures, and more.
Abhi Golhar of the Forbes Real Estate Council considers investing in a fixer-upper a smart move. The upside is that you will probably be able to sell it for more than you paid. The downside is that you will have to spend a lot of money and energy getting the place in shape. Still, you’ll get valuable home repair experience, and you’ll have a home truly yours.
But before you start measuring for granite countertops, The Tees suggests you ask yourself these four questions:
1. Can You Find A Place?
Shop for a fixer-upper the same way you would for any home. The only difference is that you’ll want to buy a home in a neighborhood where the property values are stable or increasing. Obviously, the best way to find one is to consult a real estate agent. A good one will know the market, your needs, and the value of homes in neighborhoods where you’re trying to find your renovation project. Million Acres suggests working with a real estate agent that specializes in fixer-uppers if you can.
2. Can You Get The Financing?
Once you settle on a place, finding financing for a fixer-upper is a bit of a challenge. Generally, banks balk at the idea of financing a home that needs extensive renovations that might not have or hold value after you finish your work on it. Two types of government-backed mortgages, a 203(k) from the Federal Housing Administration and a HomeStyle Loan from Fannie Mae, can help. They provide financing for the property and the renovations. The only catch is that you have to use a contractor to get estimates on the work that needs to be done and how much it will cost.
3. Do You Want To Live In It As You Work?
You don’t want to live in a place that doesn’t have a functioning bathroom or kitchen. But if you have a kitchen, bathroom, electricity, and running water, living inside a home as you renovate it can be much more efficient than staying somewhere else. Plus, you’ll get to see and live with the results as you work. Just remember that the renovations will take up nearly all your free time. It all depends on how much patience you have, and if you don’t mind walking barefoot across a floor covered with drywall dust when you get up in the morning.
4. Do You Have The Right Tools?
If the only tools you have are in the emergency roadside kit your parents bought for you for Christmas a couple years ago, you might want to consider asking the 203(k) or HomeStyle contractor to help with the work. Or you could invest in your own tools: a circular saw, a mitre saw, a drill with plenty of bits and a nut driver set, hammers and nails, screwdrivers and screws, pliers, paint brushes, and caulk and caulk guns. There are also plenty of do-it-yourself home repair instructional videos on YouTube, so you can learn how to use tools that you are unfamiliar with.
If you can answer yes to all of these questions, chances are you’re ready to take on a fixer-upper as your first home. Once you finish the project, you might be tempted to take on another!