If you’re looking to buy a fixer upper for your next home or as an investment it pays to take caution. What may look like an easy profit may turn into a huge money pit. Here are some considerations when making your home buying decision.
When buying a fixer upper, experts recommend looking for homes that need cosmetic improvements rather than structural changes or major renovations. Cosmetic improvements can be made with a little elbow grease and a planned budget. Renovations and structural changes have a tendency to grow much larger than anyone anticipates. Costing extra time and money to get the job done. Additionally, while structural improvements may be required to make a home liveable, cosmetic changes generally have a better return on investment.
When you are considering a home purchase add up the costs to renovate the property based on a thorough assessment of the condition of the house. You will likely want to have the assistance of a home inspector and a real estate agent who has knowledge of the area. The real estate agent can advise you about what other homes in the neighbourhood go for, what the schools and property values are like and if the neighbourhood is on an upswing. Be very thorough and estimate on the high end. Include labour and materials. Knowing the home’s estimated market value once the renovations are complete will then help you know what your potential profit will be. Experts then recommend deducting another 5 to 10 percent for extras and unforeseen problems. They always happen if you don’t make room for them. Once you do the math, you’ll be able to determine what a fair offer is. Essentially, it’ll be the home’s estimated future worth less the expenses to fix it up.
Getting experts to help you with your labour, materials and estimated value after the renovations are complete will help you make an accurate and fair offer on the home. And always have the home inspected thoroughly so you don’t end up having to make major structural improvements that can eat away at any potential wiggle room or profits.
Buying a fixer upper is a great way to save money on a home purchase and the rewards can be significant. Buy wisely, buy cautiously and use the advice of experts to guide you and your decision.
Happy House Hunting!
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