If you are on the market for a bargain property - finding a fixer-upper in a good neighbourhood is like hitting the jackpot. We take a look at some of the things you need to keep in mind when you are on the market for a home that requires some repairs and maintenance.
Don't buy the house, buy the neighbourhood
The holy grail when it comes to property, location matters, even more, when you are buying a fixer-upper. Real estate agents will tell you that buying a less than desirable property in a fantastic neighbourhood is your best bet - you can always update and renovate a home, you can almost do nothing about the surrounding area in which the property is located.
That doesn't mean that you should ignore some of the basics though, renovation costs can quickly get out-of-hand when you have to change the layout of the property. Removing a wall here or there or adding an enclosed patio, while expensive is nothing compared to moving a kitchen, for example, to another area of the house.
Discuss your plans to buy a fixer-upper with your real estate agent, so that they can guide you into buying a true fixer-upper and not a property that you have to spend thousands and many years to just make liveable. Going into it with an open mind and a dynamic plan could ensure that you are making one of the best investment decisions.
Roll up your sleeves
The appeal of a fixer-upper is that it usually only requires some TLC and creative renovations to turn it into a gem - and for most buyers this means getting hands-on. Doing some DIY - like painting - will save you some money on the project.
Once you have bought the property, avoid becoming overwhelmed by creating a project plan by distinguishing between structural and foundational changes, and the cosmetic and nice-to-have changes. This way you are able to more easily manage and allocate resources.
Changes that fall into the “structural/foundational” category include:
- Shoring up foundations
- Fixing or replacing the roof
- Remodelling the kitchen and bathroom
- Replacing the windows throughout
- Building new additions like bedrooms or a garage
- Rewiring the property
- Cosmetic changes are usually things like:
- Patching walls and painting
- Installing new light fixtures
- Replacing doors
- Refacing kitchen cabinets
- Fixing minor plumbing issues
- Don’t underestimate what a big difference even just a coat of paint can make to the interior and exterior of the property.
Finances when fixing up your home
Investing in a fixer-upper is all about recognising potential, but realising that potential is always going to cost money.
The idea is that a fixer-upper is a bargain so the theory goes that you’ll have money available to make the necessary changes. For most buyers, cash is a problem so you could consider registering a bigger bond and accessing that capital to pay for the fixes.
Budgeting is one of the most vital tools - knowing how much you want to spend, how much you can add if needed and when to look at cutting costs will save you a lot headaches in the future. Discussing your proposed plans with a trusted property advisor is one way to ensure that you don’t overcapitalise on the property, so that when you do sell later you will still have a good return on investment.
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