While first-time homeowners can be a little hesitant to invest in a fixer-upper, it can be a smart and lucrative decision when done correctly. Whether you’re looking to live in it yourself or transition it into a rental, there are many benefits. And when you work with quality contractors, you can feel better knowing your fixer-upper has been remade into something valuable. To help you get an idea of what to consider with fixer-uppers, Ezine Blog offers the following guide to getting the most out of your next fixer-upper.
Table of Contents
1. How to Buy a Fixer-Upper
Purchasing a fixer-upper can look different than other mortgage situations. While the price tag of the house might be appealing, the money required to make necessary repairs and improvements may be considerable.
Luckily for first-time homebuyers, there are options available with this situation in mind. A Fannie Mae Homestyle mortgage, for example, may be a good option for those looking to renovate a home, as may Freddie Mac CHOICERenovation. Both of these are designed specifically for individuals who want to rehabilitate a home and need funding for the purchase and repairs.
2. What Makes a Good Prospect
Not all older homes are built the same, and some options that look good on the outside might be money pits. According to Money Talk News, it’s best to avoid homes that have ancient plumbing or aluminium wiring, as these can be enormously expensive and eat up your budget quickly. Look for uneven flooring and cracks in the walls and foundation, as these can indicate bigger issues with stability that can be very costly and time-consuming to fix.
Be sure to do your research before investing in a given area. You want to find an area where you can get a home at a good price, but you also want to be in an area with rising home prices so that you’re likely to make a good profit.
3. Which Repairs and Renovations Make the Most Sense
Some unique repairs may be necessary for the home you purchase, but there are general improvements that many fixer-uppers can benefit from. Improvements in heating, ventilation, and AC are renovations many older homes need as technology has advanced so much over the years.
Electrical problems, even minor ones, should be high on your priority list as electrical fires are very common and dangerous. Plumbing issues should be top of mind too, especially if your fixer-upper has older pipes. Whether you need local plumbers for repair services, electricians or HVAC specialists, practice due diligence and read online reviews and check ratings before reaching out to anyone.
Where renovations are concerned, a few kitchen renovations are a must. You want to make sure the appliances are up to date, repaint the cabinets, and install new hardware at minimum. Adding a range hood above the stove is a welcome addition. It may also be wise to install new countertops and refinish the floors.
If you have a good outdoor space for entertaining, think about creating an outdoor kitchen/dining area. A cooktop, an outdoor range hood, a mini fridge, and some seating can add a unique and desirable element to your project. This may attract more buyers when it comes time to sell.
4. How to Decide Whether to Stay, Rent, or Sell
Once you’ve finished remodelling your fixer-upper, deciding whether you want to live in the home, rent it out or sell it all together can be a tough choice to make. If you took out a loan that requires you to live in the home, this might be a no-brainer, but for some, their fixer-upper might be a lucrative way to earn some passive income for years to come. For others, selling it at a profit can be an excellent way to fund another home purchase or other venture.
Consider the market before listing it for rent or sale. Research how much you can expect to make from renting it out or selling it. You could rent it out for a period of time if it’s a time of year when it’s more difficult to make a sale, such as in winter when the weather is poor. If you do decide to rent, establish your rental business properly following all legal processes required in your area and get an employer ID number or tax ID number so that you can claim available tax deductions. There are several available to offset the expenses of being a landlord and help you maximise your profits.
Purchasing a fixer-upper can be a savvy choice for first-time homebuyers when done correctly. Do your research and get the professional help you need, and you’ll be turning that old fixer-upper into a modern dream home in no time.
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