4 Things You Should Consider Before Buying Your First Fixer-Upper Home
The following blog was written by Bret Engle of DiyGuys.net:
You’re tired of throwing money down the drain. You’re done paying a monthly rent while building no equity. You don’t have much money to spend, but you can swing an affordable starter house, and you thrive on projects. It could be time to buy a fixer-upper.
Buying a home is a big decision that comes with risks, but the process can be simple if taken one step at a time. If you’re considering a fixer-upper as your first home, make sure you do your due diligence to avoid paying for it in the end.
First, think about why you want to buy: Do you want to own a home for steady rental income? Are you ready to live in your first self-owned property? Are you trying to flip the house and make a profit? The repairs and renovations that you make will depend on who will live in the house. Amenities that might appeal to renters or prospective sellers could have no relevance to you. For example, if you’re allergic to dogs, it doesn’t make sense to build a dog run in a home you plan to live in. On the other hand, if you’re hoping to rent the house to a family, a fun backyard for children could be an appealing touch.
The Search Is On
Unless you can pay cash, step one of starting the home search is getting pre-approved for a mortgage. If you’re a veteran, look into your VA loan options. While you may qualify for traditional mortgages, the VA Home Loan program was established to help service members achieve homeownership more easily, so it offers low interest rates and waives down payment requirements for military members who qualify. If you’ve never served, you still have options for affordable mortgages, including loans that don’t require you to purchase mortgage insurance, which can significantly reduce your monthly payments.
Once you’re ready to look for a house to fix up, real estate listing sites like Zillow and Trulia are good places to start. You’ll likely work with a realtor to find the perfect home to fix up, but the internet can give you an idea of the market rates in your neighborhood. You can look for foreclosed homes or search by price. After getting past the empty lands for sale, fixer-upper houses will come up soon in the search.
Hire Help or DIY?
There are two ways to fix up your home: hire contractors to do it all or save money by doing it yourself. Unless this is your profession, you’re better off hiring experts. There are some repairs that you can do yourself, such as painting or building fences, but some repairs should be left to the pros (some are even illegal to do on your own!). Not only is it safer for you to avoid complicated projects, but you’ll ensure the house is safe and structurally sound. That means hiring an experienced professional to guide you through the process. A structural engineer is a good person to start with, even before you purchase your home. They will be able to tell you if the house is worth buying.
The House is Ready — What’s Next?
Your fixer-upper home is now up to code and ready to live in. If you’re not moving in, it’s time to list your newly-upgraded home. Find a realtor to sell your house, or ask a trusted friend for a recommendation. You could consider renting out and managing your own property as a source of income and listing directly to potential tenants. If you don’t mind spending extra money, it might be worthwhile to hire a property manager.
When you hand over your home to another tenant or manager, you give up control over your property. You’ll have less knowledge about its condition. Scheduling regular visits to the property to assess damages and maintenance can make all the difference when it comes time to selling or living in it one day. After all, this home is an investment for you. It shouldn’t become a burden on your finances later down the road.
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