Are you planning to buy a house but you’re on a tight budget? Some may tell you not to get turned off by outdated and a little run-down properties. A few of them may look like a perfect location for a horror movies, but those creaky joints, old linoleum floors, and worn down windows may be the only way you can afford that great urban neighbourhood!
Imagine – if you can buy a rundown place with a great address for a fraction of the cost of a house with a great curb appeal, wouldn’t you? You can then just invest on some repairs which would definitely be cheaper, right?
Think again. Purchasing a fixer-upper can also be risky. Before you take the plunge, you should get a realistic idea of what you’re really getting into. Getting the honest opinion of your trusted realtor is a smart move.
Do your homework and find out about the work required and how much it’s going to cost you. Once you have a rough idea, add about 10% to 20% to that for unexpected costs that may unexpectedly pop up.
One of the things to consider is where you’re going to get the money to turn the horror house into your dream home. See, even if you qualify for a mortgage, that doesn’t mean that you’ll get approved for another line of credit. A way to secure credit is to have collateral other than the property you’re purchasing. It can be a valuable asset like another property or maybe a large investment portfolio. This type of loan can give you credit towards the higher value of the home (based on the improvements needed).
Hire an Inspector
Whatever you do, don’t forego a proper inspection because doing so may result to you getting surprised by a lot of serious issues later on. You might think that since you’re buying the house anyway, there’s really no point in hiring an inspector. Wrong. The only way you can actually have a pretty good idea of how much the total repair expenses would be is by checking the detailed notes of an inspector.
When should you walk away?
If the house you’re planning to buy is a fixer-upper, you should be prepared to deal with at least one of the possible major concerns – plumbing, electrical, or toxins. However, you should never buy a property with structural problems. Such costly repairs like correcting a slant, waterproofing a foundation or lifting a home for damaged footing replacement will not raise the home value. What do you do if the house you’re interested in has structural problems? You walk away.
Having the expert advice of seasoned realtors like “the Right Wans” is priceless, especially if you’re thinking of undertaking such a challenging endeavour as purchasing a less than ideal property. Make sure that you are aware of all the things that can go wrong and that you’re being realistic when making a decision. After all, what you might be seeing as a handyman’s dream can turn out to be nothing but a renovation nightmare.