The great thing about real estate is that you have so many options when it comes to your purchase. You can purchase a single family home, a condo, a semi-detached, a townhouse, a new home, or a pre-owned home. One option available with pre-owned homes is an older home that is considered a “fixer upper”. These are homes that require some renovation work. The magnitude of work often varies. And, when it comes to renovations it’s best to operate with some level of caution. While real estate is a great investment, it’s best to know what you’re getting into. So, when purchasing a fixer upper, whether it’s a home you plan to reside, or one you plan to flip or even purchase as a rental, here are some things to consider before making that purchase:
The first thing you want to keep in mind, and research as much as possible is the hidden expenses. This is almost a guarantee when purchasing a fixer upper or anytime you decide to perform major renovations on a house. Some hidden expenses can be very costly, such as a broken water heater, plumbing – leaks, structure – can the house stand up? Is there a faulty foundation? Overlooking these issues can be very costly. Do your due diligence and find out as much as you can.
How to eliminate some of the hidden expenses?
Find a good inspector. Ensure that your inspector is reputable. Check references and ask around.
Be realistic about how long it will take
While you may receive projections of a certain amount of time, the reality is that most projects take longer than stated. It is estimated that 90% of projects (in general) do not complete on time. With those numbers, you can definitely expect delays. How long of a delay is another question. But it is wise to keep that in mind. Don’t expect that your project will be completed in March as projected, and expect a move in date of April 1. It might not happen.
Because anything can happen. It’s best to avoid delays often caused by financial shortages. It is normal to expect to go at least 10%-20% over budget. To be safe, consider increasing your budget to ensure you can cover unexpected and hidden costs.
Avoid the DIY, unless your a pro
While you may be very handy, good at following instructions, and maybe even a bit experienced. Avoid trying to tackle every repair, yourself. Consider hiring trained professional, especially for the big jobs. In extreme cases, there have been situations where homes had to be demolished because of DIY attempts to repair the homes foundation. While this is extreme, it has happened, more than once. Again, be realistic about the possibilities.
Purchasing a fixer upper can prove a very fruitful endeavor. It one of the many options available when purchasing real estate. The important thing is to keep in mind the possibilities, do your research and have contingency funds available. You can have a lot of fine, and put your creativity to good use. While it can prove a very successful venture, the important thing is to keep an open mind, and plan for a few setbacks. With this mindset, you should be successful. Happy renovating!
At Team Burca Real Estate we are committed to providing clients with excellent service. This includes educating clients on their best options when it comes to Real Estate. As Re/Max agents, we are apart of an organization that sells 1 in every 3 homes sold in Canada. We would love to work with you on your real estate needs. For more information, contact us today!