There's no shortage of older properties out there just waiting to be given a new lease on life, but that doesn't necessarily mean that renovation is the right investment strategy for you.
Blogger: Lauren Staley, managing director, Infolio
For people who love old houses—and those who love to renovate them—the idea of buying a fixer upper can prove irresistible; understandably so.
Purchasing a home in need of work can save you a lot of money, compared with a house that’s ready to move into. However, it can sometimes mean a lot more work than you’d first assumed. In the end, your fixer upper could wind up costing you more money than it’s worth, once you’ve covered the costs for tradesmen, materials, and unexpected hurdles. So, to make sure that you’re making a good investment, Infolio have compiled a few things to remember before buying a fixer upper.
Remember to research
When dealing with older homes, it’s a good idea to hire a home inspector to determine what you’re getting yourself into. A professional will be able to conclude what components of the home will require major renovations, and what will simply need a lick of paint. A thorough assessment could cost you hundreds, but save you thousands in the long term. It’s also a good idea to request estimates on the work that needs doing—to define if the renovations will stay on budget.
Be mindful of budget
When investing in a fixer upper, whether to live in or resell, the cost of buying the house is only part of your expense. Your renovation materials, as well as your tradesmen bills, will need to be included in your budget.
Minor renovations could include:
• Patching and painting walls
• Laying tiles or carpet
• Fixing broken windows
• Adding doors
Major renovations could include:
• Fixing foundations
• Replacing roofing
• Installing new plumbing
• Building garages and additions
• Where possible, try to give yourself a buffer just incase something goes wrong. If funds run out mid-renovation, you’ll have a disaster on your hands.
Consider your offer
Buying a fixer upper is unlike buying any other type of home. Before you make your offer, you’ll need to check the price of the surrounding houses in the neighbourhood—your fixer upper should cost considerably less. This will mean that once you’ve finished your renovations, and it’s time to sell, you’re more likely to receive a decent return.
Cosmetic renovations—as opposed to structural changes—usually deliver the biggest returns if you’re looking to fix and sell. During inspections, look for an older kitchen or weathered bathroom—improvements in these areas could lead to healthy profits. Where possible, major structural work should be avoided.
DIY versus builder
Most of us like to think that we’re pretty handy on the tools, but the reality is that most of us are not. When commencing a fixer upper project, it’s important to be realistic about what work you can handle, and what work you will outsource.
Before commencing work, it’s a good idea to ask local officials if the work you plan to complete requires a permit, and how much it will cost. Conducting work without a permit may save you money, but it may cause problems when you resell your home.
Although they may appear comparably cheap, fixer-uppers can cost you more than you may think. Whether due to financial burden, physical stress, or time-consuming schedules, projects such as these can really take their toll. To make your best decision, try to keep your emotions out of your primary selection process; stick to the facts. To allow the venture to work in your favour, you want a realistic project, not a dreamer’s mistake.
Fixer upper projects might be growing in popularity but, just like any trend, they’re not for everyone. While the idea of revamping an old home may sound appealing, it’s important to consider if the job is right for you. So, before purchasing your fixer upper make sure you have the time, the money, and the emotional commitment required to see the project through.