When I started my search for a fixer upper to buy, I worked with many people to learn the crucial steps. Since I had no background in real estate or renovation, the most important person was a realtor. They also renovated properties, which was a plus. They were also able to provide accurate cost estimates and recommendations for how extensive the renovation should be, without over improving for the neighborhood. Not every agent has this specific type of experience so it’s important to be willing to meet with a few realtors (or more) to find one who is the right fit.
1. Are you looking for a home that needs cosmetic updates or a complete overhaul?
There is a difference between changing out some flooring and paint versus removing walls and installing an entirely new kitchen or bath. If you are going the overhaul route, having a contractor walk through the house with you and provide an estimate can give you an idea of costs. Also know that many times there are surprises that come along with large projects. Including a 15-20 percent contingency may be something to consider.
2. What is your all in number for the house and the renovations?
This is the number that you are comfortable having invested even if things do not turn out as planned. If you are planning to do any type of renovations that amount can influence the amount of money you will spend on the house. If you buy a house for $150000 that needs $75000 in repairs then your all in number is $225000. Even a house where you are just planning cosmetic improvements can add up quickly . Knowing what you will need to buy and what you will need to hire out for is important. With materials, you can influence those numbers if you are willing to put in the time and effort to look for deals. Tile, flooring, cabinets and vanities can often be found at discount outlets and make a great option.
3.How are you going to purchase the house and are you borrowing for the renovations too?
An experienced and knowledgeable lender will be able to walk you through the various loan options. This will help you decide which may be the best fit for your situation. There may be down payment considerations, higher fees, and longer time lines for closing due to the increased complexity of the loans. You should also be prepared to provide a scope of work or a list of the repairs for the lender. Create a value that you believe the house will be worth after the renovations are complete. All of these steps are designed to make sure that the project and repairs result in the most desirable outcome for the borrower and the lender.
4. Who will you have inspect the home?
Homes can be secretive and that’s where a good inspection can be valuable. Identifying areas of concern or items that may not have been at the top of your list. These items can help you make an educated and informed decision about the home. Just a note, a home inspection is not 100% absolute so if there is an area of concern that the home inspection discovers ( i.e. electrical or foundation) it may be worth bringing in someone who is an expert in that field to further investigate.
Armed with these steps you are well on your way to finding your own fixer upper. Happy Hunting!
So you’ve purchased a house to flip. Now what?
Want to buy a property and renovate it?
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