Are you ready to buy a fixer-upper? There are a few things you need to take into consideration before answering that question.
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Are you ready to buy a fixer-upper?
To answer this question, you need to understand what you’re getting into, because unless you’re just repainting and replacing the carpet, this kind of project takes a long time. That’s why, before you begin the process, you should talk with your Realtor so you both know what you’re getting into.
Shopping for fixer-upper is sort of like shopping for another home, but with a few key differences. The homes you look at should have enough equity in them so that you can spend money on them without over-improving them. Also, anytime you buy a fixer-uppers, whether you plan on staying in the home or not, you need to make sure you’ll be able to get your money back when you sell it. You make your money when you purchase the fixer-upper, so keep an eye out for estate sales, foreclosures, or listings that were once rentals and are now a little rough around the edges.
Before you buy anything, though, you need to do your due diligence, and it’s a good idea to talk to a contractor during this time. There’s a lot of research involved in this process, and you need to be able to estimate the repair costs of each house and price out the materials (flooring, paint, etc.) needed for those repairs.
I’ve seen home renovation projects nearly ruin marriages, so make sure you have the necessary time to devote to this type of project. If you’re a working professional, you probably won’t have time to fix up the property all by yourself, so you should consider hiring a contractor to do the work.
If you’re able to do the work yourself, you can build up a lot of sweat equity, but you need to know your skill level before you dive into it. Sometimes people get in over their heads and end up stuck with a neverending rehab project. Either that, or they’re forced to sell at a loss.
When it comes to financing your purchase, there are some great loan options available out there. The FHA 203(k) and FHA 203(k) streamline loans, for example, will finance the purchase of the property and the work involved to fix it up. There are also various conventional loan products that do the same thing.
I have a background in construction management and have flipped many homes myself, so if you have any questions about this topic, don’t hesitate to reach out to me. I’d love to help you get started.