When buying a fixer-upper, how do you protect yourself and your investment, including when it’s time to remodel? When we are young and dream of buying our starter home, what better option than buying a property that needs TLC (or total makeover), right? After the real estate market crashed, there were good deals to be made and fixer-uppers were sold or auctioned off for very little money. While the market is recovering, some houses are still neglected and listed for what seems like little. But as in everything, there are traps you don’t want to fall into and mistakes you do not want to make.
Mistakes to avoid when buying a fixer-upper
Here are the things to look for and think about when buying a fixer-upper to protect yourself from costly mistakes. Even chipping paint in an older home can be sign of major issues, so look for the:
The hidden hazards
- Lead paint, frequent for home built before 1978 will be found inside and outside.
- Asbestos lurks in popcorn ceilings and vinyl tiles
- Mold. Easier to determine because of the musty smell, stains on walls or ceilings and swollen floors or baseboards. Follow the water.
The structural issues
You want the home to have great bones, it’s the only way to keep the costs down.
- Look for cracks on the walls; they are usually due to foundation problems and can be quite expensive to repair.
- The condition of the roof (and potential leaks in the attic).
- The doors and windows need to be checked also, very thoroughly because replacing them all may be a necessity if you do not want your home to be open (no pun intended) to drafts and leaks, not to mention pests.
Check with the City Planning Department
- Your remodeling project will be subjected to codes, zoning, rules and regulations. Laws are being passed every day and it's hard to keep up so you have to make sure that your remodeling will be authorized, and if you need permits.
- Talk to your insurance company; you need to protect yourself as not only a homeowner but also a builder.
- Talk to your banker; once you have assessed the “damages” and received a few quotes, make sure that your bank will back you.
There are pros and cons to buying a fixer-upper. The home inspection will unveil a lot of issues (and give you opportunity to reassess the deal). Besides the structural improvements that may be needed, budget needs to be set aside for updates (kitchen, bathroom, room additions or extensions). To prevent the money pit, weigh your options. If you want to put your stamp on a house, is building one a better route? If you want history, be prepared for surprises. If you want ROI, do your maths ahead. In any case, do everything by the book, do not take anyone’s words for anything unless you hired them yourself.