Flipping houses or buying a fixer-upper seems to be a common trend. If you want to join the masses and throw some elbow grease into a space to make it amazing, then you need to err on the side of caution. While you can get a great deal and make a run-down shack an amazing dream home, you should be careful of such a purchase. Your diamond in the rough may have some hidden problems that could cost you big. Here are some things to keep in mind when buying and moving into a fixer-upper:
1. Do Your Research
Sometimes an offer that is too good to be true may be just that. Make sure that before you dump 50 thousand dollars into a home in remodeling fees that you can get that out of it. For instance, if you buy a house for 20 thousand and the neighborhood comps are in the 70-thousand-dollar range, you cannot afford to go over your initial budget.
You want to make sure that your remodel makes sense for the area or you will be on the losing end.
2. Set A Budget and Prepare for Incidentals
Whether you’re buying an old or newer home doesn’t matter. You need to make a budget, and if you watch any of those house flipping shows on television, you know that nothing ever goes according to plan. Add about 10 percent to your budget to cover incidentals and unforeseen problems. Nothing like having knob and tube wiring and not having any money in the budget to fix it.
3. Interview Many Contractors
Unless you’re lucky and can do all the work, you will need to hire a contractor. You want to interview several before you make your decision. Make sure to check references, and ask them to see pictures of work they’ve done. The more legitimate companies are the ones that have permanent addresses and have been in business for some time. Never give any money upfront.
You want to make sure that you have a draw system, and don’t hand money to someone who will run off with it.
4. Don’t Cut Too Many Corners
There are things that you can compromise on and cut some corners to save money. However, there are things that you cannot skimp on too. For instance, it’s okay to go with a cheaper grade of cabinets, but you don’t want to pinch pennies on the structural elements or your central systems like the HVAC, plumbing or electrical. It may seem like a good idea at the time, but it can end up costing you in the end.
5. Expect Delays
Never make goals that you cannot obtain. Even if you are working with the best contractor in town, there are going to be delays. The contractor may be held up because of the painting crew or a custom order that is running behind. You must always add more time to your estimated time-frame to ensure that you have an accurate completion date. It takes time to do it right, and you don’t want to rush perfection.
It’s fun and adventurous to rehab a home from ruins and making it a masterpiece. However, make sure you have a detailed plan, an excellent work crew, and plenty of money. These projects are amazing when they are finished, but it takes a long time to hit the finish line.