If you’re someone who loves a project, interested in ‘do-it-yourself’ work, or is just generally handy, the thought of purchasing a fixer-upper home is probably a dream. But before you purchase that old home, there are some things to consider:
Do the Math
Make sure you’re not ripping yourself off—consider all the costs that will be involved after you purchase the home as well. Start with a thorough assessment of the condition of the home, and what the estimated costs will be to renovate it.
Costs to consider when estimating: materials and labour (hired and your own). Once you figure out what you think it will cost to get the home where you want it, then you can do a simple equation: subtract your renovation costs from the estimated value of the home post-renovation. You can predict the value based on comparable real estate prices in your neighbourhood (you can always ask an expert’s opinion), then it’s safe to deduct and extra 5-10% for unforeseen costs. What you’re left with, should be your offer for the home.
Pick Projects That Offer ROI
An ideal fixer-upper purchase would be a home that requires mostly cosmetic improvements such as paint, drywall, flooring, lighting, doors, windows and siding; these types of improvements tend to cost much less. Structural renovations such as major additions to a home, tend to cost as much or more than they will return in market value.
Get The Right People Involved
Once you have made your purchase and are ready to renovate, ensure you have licensed and insured professionals helping you out (refer to our previous blog on contractors). Whenever you are hiring professionals, ensure you get it in writing.
If you have questions about purchasing fixer-upper homes, or want recommendations on what contractors/professionals you should work with, please contact us.
