Buying a Fixer-Upper as Your First Home
Whether you’re a do-it-yourselfer, have a cadre of handyman friends and family, or figure that after binge-watching Rehab Addict, Renovation Realities, and This Old House you can tackle anything, buying a fixer-upper as your first home requires quite a bit of planning.
After all, a home that appears — at first glance — in need of just a little TLC might turn into a real renovation nightmare. You definitely don’t want to get sucked into a financial black hole that rivals The Money Pit.
Potential Make-Or-Break Considerations
How can you tell if a house is a diamond in the rough or too rough to rescue? Schedule a home inspection to identify major structural issues like problems with the foundation, plumbing, or termites. If you find a house you really like, it’s not a bad idea to ask a contractor to take a look. You may need to pay a few hundred dollars for his inspection, but it’s a worthwhile investment and could potentially save you tens of thousands of dollars down the line.
Unless you don’t mind living in a perpetual state of construction for several months of renovations, especially if you’re doing major upgrades, you’ll spend most of your free time working on the house.
If you’re planning to hire a contractor to do the bulk of the work, ask your realtor for contractor recommendations, and solicit at least three different estimates. The estimates should be fairly close to each other — be wary of a contractor who’s grossly underbid the other two.
Check and double-check your finances. Most people put between 10 and 20 percent down on a house. If you’ve set money aside for renovations or plan to get a home equity or other loan, get an estimate on the work you (or a contractor) will do, and add another 20 percent to account for unexpected “surprises” because no matter how well you plan, extra expenses will happen. And know that the average listing price for a fixer-upper home in Boston, MA is $815,000. However, prices vary by location, so search locally to see what’s available.
For more recommendations and advice to consider before buying a fixer-upper, check out This Old House.
What Should I Tackle First?
SFGate recommends analyzing your reasons, needs, and budget when planning your renovation. Prioritize and try to finish the big stuff, like painting, flooring, or carpet upgrades, before you move in. Realtors say these carry more bang for the buck for resale value.
- Paint: The quickest, cheapest way to freshen up a room.
- Kitchen backsplash: You don’t have to completely remodel your kitchen — a relatively inexpensive backsplash adds significant value.
- Cabinet upgrades: Paint or reface cabinets and add new hardware.
- Bathrooms: An updated vanity and faucet are a simple way to freshen up the bathroom.
- Update fixtures: Upgrade lights and plumbing fixtures to create a new look.
- Remove popcorn from ceilings (test for asbestos, first) and smooth out textured walls.
- Replace doors or windows with larger openings and French doors to let in more light.
- Be sure you have the right power tools for the job, including Sanders, jigsaws, and drills.
Newbie fixer-uppers should consult this guide from Homes.com for more advice and suggestions.
Keep or Sell?
The elbow grease, weekends, and late nights have paid off, and you’ve finished the renovations! You might wonder whether you should keep or sell, but whatever you decide depends on your goals and your investment. Realtors recommend considering whether your home’s value has increased as a result of the renovations — and that depends on many variables, including the market and even your neighborhood.
U.S. News & World Report says 2018 is a good year to sell, but many realtors recommend staying rather than selling because it’s rare you’ll recoup all the money you’ve invested if you sell immediately.
When you look at a fixer-upper and see potential past the peeling paint and ratty carpeting, don’t fear the commitment. You’ll take advantage of a lower sales price, less competition, more DIY know-how in your toolkit, and the pride of satisfaction when you’ve turned that fixer-upper into your perfect home.
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