Whether you are buying a fixer-upper to flip and sell as an investment or you are planning to live there, there are a multitude of things you should consider before purchasing.
Fixer-uppers can be a lucrative deal or a disastrous money pit. The idea of fixer-upper homes is increasingly popular because they allow you the opportunity to invest your time, labor, and materials into designing your dream home and therefore creating your own equity.
But before you consider jumping in, it is important to understand what it takes to make a fixer-upper worthwhile. The last thing you want to do is find yourself way over your head!
Before You Invest
If you are looking to purchase a fixer-upper home, do your homework. Here are some tips to consider before you invest.
1. Location, Location, Location
As with anything real-estate related, location is one of the most important factors when purchasing a fixer-upper. If you are looking to make an investment or create equity, look for a home that is in a desirable school district or an up-and-coming neighborhood.
A home’s location might be a good indicator of why the property value is low in the first place. Homes located near busy roads or construction zones will not increase a home’s property value even when fixed up.
The layout is another important factor. A home’s internal layout often can be reconfigured for the right price. But are you able or willing to front that much money into the perfect layout? Today, most homeowners want an “open” floor plan with bedrooms close to bathrooms.
Also, consider the home’s external layout; this may be harder to fix. Adding on to the property may be difficult depending on the size of the lot.
The condition of the home is another issue. As with the layout, updating a home is easier when you have more money to invest. But be careful, if you bankroll wads of cash and it surpasses what the house is worth — it might become a “money pit.”
Here are examples of easier repairs:
· Refinishing floors
· Installing or updating ceiling fans and/or light fixtures
· Replacing broken or old windows
· Repainting or refacing kitchen cabinets
· Replacing doors
Here are more complex and costly repairs:
· Complete kitchen or bathroom remodels
· Adding central air conditioning
· Add-ons such as a garage or patio
· Replacing sewer lines, plumbing, and electrical
· Fixing foundation issues
4. Home Inspection
Before making a purchase, have a certified home inspection completed. You must know what you are getting into. A home inspection can make or break your purchase and, after all, there is probably a reason it is such a great deal.
What may seem like basic, less-costly repairs on the outside can morph into extreme issues that eat through your budget when the walls are opened.
A home inspection will examine and report on these major areas:
· Roof (age and condition)
· Home warranty
· Pests present (termites, roaches, rats, ants, etc.)
· Sewer lines and septic tanks (if applicable)
· Engineering reports (contamination, natural hazards, nearby landfills, etc.)
5. Title Insurance
One of the final factors to consider before purchasing a fixer-upper property is title insurance. It is crucial to acquire this insurance, which protects you and your mortgage lender if issues or defects arise with your house.
This includes unknown liens, property restrictions, encumbrances, public-record errors, and illegal deeds.
If any of these issues were to crop up and you did not have title insurance, you would be responsible for financial issues — or worse. You may find out you do not own the property and lose your new home.
Purchase With True Concept Title
Despite the potential headaches of work and worry, purchasing a fixer-upper can be a wonderful thing. Before you invest, make sure to contact the mortgage and title experts at True Concept Title.
Our team will work with you to make the home-buying process as smooth as possible, including the protection of proper title insurance. To learn more about our national title & escrow services, call us at (813) 263-7168.