So, you’ve spotted your dream home. However, it’s slightly outdated and could use some improvements here and there. Does it need a full overhaul or just a little tender loving care? There are many advantages to purchasing a home in need of repair and updating. You’re likely to acquire a lower purchase price. There will be less competition to purchase the home. There’s great potential for exponentially increasing the value of the home once all the repairs are completed. There’s also that level of personal satisfaction of completing such a fantastic project. So, now that you’ve decided the pros outweigh the risks, stand back, remove yourself from the “wanting” and take a good hard look at this building. Ask yourself the following questions:
- Are you willing to roll up your sleeves and get dirty?
- Are you willing to be patient on those days when everything seems to go wrong?
- How much money are you willing to sink into repairs?
If you’ve answered these questions in favor of moving forward with this adventure, then let’s get started! The very first two things you’re going to need for this project are patience and funding. Hopefully, you’ve already acquired the patience and wisdom to know what you’ve signed up for with this renovation. Let’s move on to funding. There are loans out there which assist in home restorations. The FHA 203K Rehab Loan or the Fannie Mae Homestyle Renovation Mortgage allows you to purchase a home with a financial reserve that is put into escrow to fund your restorations.
Before you approach that bank for a restoration loan, be sure to consider the following items. Is the location of the home in a good area? Ideally, you’ll want to seek out the “worst” house in the best area of town. Once your renovation is complete, your property value will increase almost immediately. If you choose to buy a house in a less-than-desirable part of town, you could be facing a never-ending decrease in property value, due to the surrounding homes. You could also be facing higher crime rates. So, be sure the area your home is in will be as promising as the home, once it’s completed. Something else to consider is the configuration of the home itself. Some buildings just scream “1965” no matter what color they are or how much the landscaping is built up around it. If a house is dated from less-than desirable architecture trends, you may want to reconsider. There are fine lines of boundaries for which homes built prior to 1955 are desirable and anything after that can get kind of “iffy”. You want to keep resale value in mind at all times. Just because you love the look of the Brady’s home doesn’t mean someone else will come along in five years and find it as appealing. Do your research. Find the trends that sell homes in your area. Another factor to consider is the layout of the home. Will family life flow through the home? There aren’t many people that like walking into a front door to see a bathroom immediately or having to walk through a bedroom to get to the only bathroom in the house.
If your house passes all these factors, take a good long look at the condition of the house. Walk the exterior. Make a list of what needs to be done. Walk the interior and make another list. Consider the costs. Expensive items would be HVAC installation or replacement, foundation repair, roof replacement, replacing plumbing, laying concrete for drives or walkways, window replacements, full remodels of kitchens/baths, adding rooms or garages. The less expensive minor/cosmetic repairs would include: carpet replacement, floor refinishing, patching/painting walls, installing light fixtures and switches, broken glass panes in a single window, refacing cabinets, replacing doors, exterior painting, or adding a deck. Most of the minor repairs can be done yourself if you’re into carpentry and painting. Doing the smaller projects yourself can save you large amounts of money. Consider the overall costs of the improvements. Expect those little surprises that may pop up throughout the restoration.
When it comes time to hire contractors, a few words of advice. Check their background. Be sure they’re a legitimate company with licensing and insurance. Hiring a friend or acquaintance is never a good idea. Work quality tends to suffer or doesn’t get completed. Save yourself the headache. Hire a legit company. Always get three estimates from three different companies. This ensures you’re getting the best price and better quality. Once you’ve hired the right contractor, be sure to communicate exactly what you want and expect, both verbally and in writing.
Moving forward, remember to expect the unexpected. It won’t take long for your fixer-upper to feel like a money pit, but then almost overnight, it will all fall together and you’ll be walking into your dream home. You may be tweaking things here and there around the house for the first few months, but you’ll have acquired your dream home through hard work. There aren’t too many more satisfying things we can do for ourselves.