If you’re a homebuyer contemplating the purchase of a fixer-upper, there are some facts you need to know before buying one. While the concept of making a profit by fixing and turning over homes seems attractive, the outcome can be financially devastating if you select the wrong type of fixer-upper.
The ideal property would require very minor fixing up such as removing outdated wallpaper or linoleum. However since there are many other buyers and investors looking for simple fixer-uppers, you’ll have a hard time locating one. But don’t give up hope, there are certain fixer-uppers other buyers will overlook, especially if they’re visibly unappealing from the street.
On the the opposite end of the spectrum, you have homes needing major remodeling including structural upgrades, adding or eliminating walls or room, and lots more. Unless you’re lucky enough to have a contractor in the family, you’re better off avoiding these money pits-particularly if they have health hazards (like mold) or are uninhabitable due to major damage to the floor or roof. Let’s go over the 3 main reasons to avoid this type of fixer-upper:
1) Getting A Mortgage May Be Tough – If the property has significant defects, a bank may require you to complete a certain number of repairs before it approves your loan. If you don’t have the funds to complete the repairs, the bank won’t approve the loan.
2) Repair Costs Can Exceed What You’re Willing To Spend – If the reason you purchased a fixer was due to financial limitations, how will you come up with the money for additional repairs? Don’t be fooled into thinking a basic cosmetic fixer won’t need some minor reconstruction work. If you still decide to buy a home needing significant remodeling work, be sure you set aside additional funds for future projects.
3) Be Prepared For Extra Stress And Commotion – Going through a major remodel can disrupt your daily life. Not only will you experience extra stress, you’ll have to take time off work to periodically monitor construction projects. Make sure your family has discussed how to cope with these additional inconveniences.
The best choice among fixer-uppers would fall somewhere between the two extremes: a cosmetic fixer in need of reasonable repairs you can complete yourself or with the help of a handyman or contractor. Select a house needing minor improvements such as repainting, replacing wood flooring, or replacing a toilet. Avoid major remodeling such as new copper plumbing or a new foundation. Once you locate a home that fits your needs, be sure to:
1) Stop by your city’s building department and discuss your plans with them to see of there would be any problems. Each city has it’s own set of codes regulating any remodeling upgrades such as electrical and copper piping, height restrictions, setback rules, and other limitations.
2) Don’t invest a lot of time and money into a second story addition or adding a room without first getting the professional opinion of an experienced contractor, architect, or engineer.
3) If you’re going into a fixer-upper purchase with another partner, make sure everyone involved discusses how they’re going to cope with the added stress and extra responsibilities of supervising construction activities.
Looking to find the best deal on a starter home? Then contact these local Irvine Realtors or Santa Ana Realtors to help you find one.
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