Is a Fixer-Upper For You?
Doing your due diligence
Planning for your Future
When buying a house, a fixer-upper can be the perfect opportunity to break into the market or neighbourhood if your finances won't allow it otherwise. However, a large scale renovation can be a dubious task if you are not fully prepared right from the beginning of the process.
Before buying a fixer-upper, you need to take into account a number of factors before deciding this type of project is for you.
Do You Have the Time to Spare?
If you enjoy taking on new projects, are creative and hands on, then a fixer upper might just be the perfect residential property investment.
Renovating an old house can be very rewarding and offers the opportunity to create a home with all your specifications. More often than not, the fruits of your labour will be a sought-after and inviting property.
However, you need to consider your current lifestyle before launching into a project. Renovations can be draining on your time and if you are busy at work or with a young family it might be too disruptive.
If you are planning on a DIY project ensure you have the time to spare. If you know you are busy, hiring professionals can combat time issues. Builders and project managers can take a lot of the strain off of you and your family while renovating.
Do you Have the Budget?
Creating a budget is crucial and sticking to it is even more so. Allowing for hidden costs will help you stay within your means during renovations.
When it comes to money and renovations, you should accommodate for and expect the unexpected. The margin for error in any renovation is large and there will be setbacks.
However, you can minimise potential disasters by obtaining a building inspection before purchasing. A building inspection will help to uncover any serious structural issues and extensive rejigging that might need to be done.
Consider also the layout of the home. Character houses are often configured in a way that doesn't suit a modern lifestyle, such as large entertaining spaces. Do not get distracted by the charm of an older home and ignore the troubles its character can cause.
Cosmetic improvements can be done at a reasonable cost whereas tasks such as strengthening foundations will add a lot to the process, so must be budgeted for before purchasing.
Are You Over-Capitalising?
Often, buyers purchase a fixer-upper because of the potential for capital gain when it comes time to sell the property.
Therefore it is important to make sure you are not over-capitalising on the potential value of the property taking into account renovation costs. Avoid this by considering what future buyers will look for when buying a property in your neighbourhood, and focus your renovation on that.
For example, if every house on the street has a swimming pool this might be an addition to consider.
Buying a fixer upper can be emotionally and financially rewarding, particularly if you are well prepared and careful with your budget.