The last thing you want to do is purchase a home that ends up costing you more to fix than you calculated for. So before you spend a lot of your time and money on a fixer-upper, you need to know the questions to ask first.
Is the Investment Worth It?
Deciding on whether to purchase a fixer-upper is a big deal. You need to make sure that it’s an investment you’re willing to commit to. If you have a contractor, they’ll make you aware of the state of the home, and also give you a rough estimate of the total costs of fixing the house.
Even when you have a trusted contractor, it’s essential to have a professional home inspector look over the property. A home inspector is trained to find problems that a contractor might otherwise overlook, discovering what is often referred to as “inspection deal breakers.”
Do You Have the Time to Invest?
This is a project that’s going to take up a ton of your time. Whether you have any help or not, at the end of the day, it’s going to be your home. That means you’ll be in charge of that home day in and day out.
If anything goes wrong and there’s an accident that occurs in the home, you’ll be the only one responsible for dealing with that situation. So if you’re serious about buying fixer-uppers, you need to learn how to manage your time. Additionally, if you’re not looking to hire a contractor, you will need more time to spare.
Do You Have the Money to Invest?
You need to be 100-percent sure that you have the money, or be willing to obtain the necessary funds to purchase the home and have it fixed. Like most fixer-uppers, you can never perfectly calculate the final costs, so be ready to pay a little more if things don’t go as planned. One of the most significant mistakes is not realizing there’s a difference between a fixer-upper and a rehab home. When you don’t understand this distinction, your budget can get shot very quickly.
If you’re getting a loan, you need to make sure you know exactly what you’re signing up for. A mortgage is a serious commitment of your trust and fiscal responsibility. If you have bad credit, a loan will probably be a bad idea for you. It’s advisable to get your financial house in order before committing to more debt.
Is the Home in a Good Area?
One of the biggest mistakes both investors and traditional homebuyers make all the time is discounting the importance of location. Agents constantly talk about how critical the location is in the grand scheme of things. It’s vital for your home to be in an excellent area. The location of your home helps determine how much your home appreciates over time.
Even the type of road a house sits on affects the price. The difference in value from a home located on a busy street versus a quiet neighborhood can be night and day. Great schools and public transportation are just some of the things you need to look at when purchasing a fixer-upper home.
Make sure to get a feel for how appreciation has been over the last decade. Is it keeping up with other surrounding areas? Consult with your buyer’s agent to get their opinion of how the appreciation will be before moving forward.
If you’re looking to start buying fixer-uppers, you have to able to spend a ton of time doing your research first. Additionally, as a beginner, you can make many mistakes, and it happens to a lot of people at some point. Don’t let your fixer-upper become a rehab money pit!Questions? Contact Corridor Lending Today!