You’ve saved up the money, and you and your partner have been talking about it for ages: buying a new home. There are many advantages and
disadvantages of fixer-uppers. If you’re a first-time buyer, here are some do’s and don’ts of buying fixer-uppers.
Do Consider a Short and Long-Term Budget
According to the Washington Post, fixer-uppers are typically much cheaper than other homes. The median listing price for a fixer-upper home in Portland, OR, is $500,000. However, saving money upfront doesn’t guarantee what the costs will be ahead.
Calculate the cost of the house now as well as the renovations needed and the labor that comes with it, even if you’re doing it all yourself. Take into account the bills for utilities, insurance, and taxes. It’s all too easy to focus solely on the money for the here and now.
Don’t Spend All Your Savings on the Down Payment
When buying a house, you’ll be making a down payment that’s usually about 20 percent. If you pay 20 percent or more, you don’t have to pay for mortgage insurance. However, if you use up all (or most) of your savings just to avoid the mortgage insurance, you’ll be living in pretty tight circumstances. It’s best if you just pay for mortgage insurance and have emergency savings.
Do Find a Professional to Help You Find a House
DIY comes to most people’s minds when they think of fixer-uppers, but you shouldn’t do everything yourself. You’ll need a good real estate agent, but you’ll also need a loan officer or broker — and maybe a lawyer. Don’t look for houses unprepared.
Don’t Commit Until You’re Certain
As mentioned before, consider everything that goes into the cost of living, not just the mortgage. In addition, look into inspections. According to the Balance, you should get a home inspector before committing. You’ll want to inspect for roof, sewage, and pest problems. Also, you should also consider getting a home warranty.
Do Take Location Into Consideration
Look in your local area for fixer-uppers. Location also includes geographic factors and potential natural disasters. If the house you’re looking at is on a hill with potential for a landslide, you could avoid serious disaster. Think about earthquakes, fires, heavy rain and snow, or other things that might make living difficult.
Don’t Take on Projects You Can’t Handle
Take time for a quick reality check: Should you really get a fixer-upper? If you’re eager to make a quick move, a fixer-upper might not be for you. Fixer-uppers are also bad for people on fixed budgets, as there is potential for unforeseen costs. If you’re more in love with the idea of a fixer-upper than actually fixing a house, it’s best to look into an established house.
Do Improve Your DIY Knowledge
This is the fun part about getting a fixer-upper: Doing whatever you’d like to the house. Make sure you have the time management skills and flexibility for fixing. Tackle projects one at a time. Try to make sure plumbing and electricity are functioning first before moving onto other areas. Research what kinds of power tools you’ll need, like sanders, drills, or jigsaws.
Do or Don’t Sell — It’s Your Choice
After all that, do you stay or sell? It all depends on what your plans are. If you’re hoping to settle down and keep what you’ve built, stay. But if you’re looking to make a little extra money, you can sell and move onto another house-flipping project.
Fixer-uppers can be rewarding. Make sure you research, enlist the help of professionals, and budget carefully. If you go into this prepared, you’ll have one big adventure ahead of you.
Bradley J Rich