Buying A Fixer UpperWhat you want in a new home and what you can actually afford in a new home, are often two different things. Many times the home that you can afford isn't in the best condition or needs updating. Homes that require a little fixing up will be cheaper than a similar home in perfect condition. However, if the repair costs are more than the discount you're not getting a bargain. There are bargains out there the trick is knowing what to look for. Your realtor can provide useful information about targeting fixer uppers.
Before you consider anything determine if the home is in need of repair, remodeling, or both. Many homes need both types, but both don't provide equal returns on your investment. Repair work is usually the out of sight, out of mind things such as a foundation work, plumbing or electrical work, etc. Remodeling, on the other hand, involves things such as adding new kitchen cabinets, fixtures or appliances, adding a bathroom, etc.
The important thing to remember is repair work usually costs money while remodeling makes money. You may find a home needing $25,000 in repair costs may only be priced $15,000 below current market value. On the flip side of that, a home in need of a little cosmetic painting may be $10,000 below market value.
One way to turn that equation around is to make your repairs into a remodel. For example, if you need to replace a large amount of dry rot in a wall, try adding a picture or bay window. If you need to replace the roof anyway add skylights. If you have sheetrock damage as well you might consider vaulting the ceiling or adding recessed lighting. These simple things can turn what would normally be a money drain into a money maker.
Using energy efficient materials will pay off every month when your utility bills come in.
It's a fact that not all remodels will recoup your investment dollar for dollar. A fireplace, a bathroom addition, and kitchen remodels are usually your best bet. Avoid any major overhauls unless that is the trend in the neighborhood. Your goal shouldn't be to have the biggest, most expensive home on the block. Your best bet is to remodel the worst home or add size to the smallest home in the neighborhood and bring it up to market value. Ask your realtor or appraiser what items they think would add the most value to your home.
PS Pools are not a good return on your remodeling investment dollar.
If you are determined to do the work yourself, then be sure to keep all receipts and document everything that you do with photos. It's not a bad idea to contact your insurance company and let them know of any upgrading that you do. You'll want your insurance to cover your improvements. It is also good in case you want to refinance down the road.
If you lack the time or ability to work on your house yourself, contact your local contractors association and get recommendations of a few quality contractors. Be sure you ask for references and ensure that the contractor that you hire is licensed and bonded
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