In 2020, 33% of homebuyers were first-timers, according to the National Association of REALTORS. Buying a fixer-upper can help you get into a home at a lower price. But understanding the process helps you make a smart purchase.
Buying Process
When you put in an offer, consider the home's value and required repairs. Having a home inspection helps you understand the extent of the repairs. Some homes are sold "as-is," which means the seller won't do repairs and doesn't guarantee the home's conditions. Home inspections are especially important for as-is homes. Consulting a lawyer and reviewing land records can help you spot red flags.
Additionally, you can look into setting up your flipping venture as a legal entity early in the process. This ensures that you enjoy tax benefits, as well as limit your personal liability. To start, get an EIN number. A formation service like Zenbusiness can take the task off your plate if you prefer not to do the legwork but also save on lawyer fees.
Financing
Buying a fixer-upper can be expensive with the repairs. A mortgage calculator estimates the monthly payment based on the purchase price, down payment, mortgage rates, and loan length. Then, estimate repair costs.
You can finance the home like other purchases. You'll also need funding for renovations. If you want to finance the renovations, an FHA 203(k) loan lets you get one loan for the house and renovations.
What to Look For
Cosmetic issues are more affordable than structural issues. Foundation repairs typically range from $2,142 to $7,424 while a roof replacement runs $5,583 to $11,617, according to HomeAdvisor. Evaluate the extent of the repairs and get estimates to help decide.
Prepare for the Unexpected
Finding more issues once you start renovations is common. Save part of your renovation budget for surprise repairs. Unexpected issues also delay renovations. A total fixer-upper can take months to complete.
Prioritize Projects
Renovations often happen in stages when you're renovating the entire house. Unless you have a large remodeling budget available immediately, you'll need to prioritize the projects. Structural issues should be repaired first.
Next, consider which projects have the best return on investment. Garage door replacements offer a 93.8% ROI while an upscale master suite remodel only has a 47.7% ROI, according to Remodeling Magazine.
Once major renovations are done, hiring Let Your Space Bloom for organization helps improve your home's use. The services help you utilize the space well and unpack once you move into your renovated home.
DIY vs. Professional
DIY home renovations save money but can be dangerous and time-consuming. Figuring out how to do the repairs takes time, especially if you're doing it in your free time. Some jobs are dangerous if things go wrong. Doing wiring yourself can result in electrical shock or electrical fires if you make a mistake.
Low-risk tasks like demo and painting are good for DIYers. Projects that require a permit or specialty skills are better left to professionals.
Stay or Go
Flipping the fixer-upper can be a profitable move. Calculate your investment and the estimated sale price to see if you can make a profit. Consider the pros and cons of staying. If the home is in your ideal neighborhood and has a good layout for your family, staying might be the right choice.
If not, selling and buying a better match is an option. Let Your Space Bloom offers pre-staging services if you sell.
Your First Home
Planning thoroughly helps you succeed in renovating a fixer-upper. Consider the organizing services from Let Your Space Bloom for the perfect finishing touch after the renovations.
And a big thanks to Mr. Bret Engle for this bodacious blog post. You may contact Bret at bret.engle@diyguys.net
