Whether you are considering purchasing a fixer-upper to live in or as an investment, if you don't have experience throwing tubs out of second story windows, you need to start asking yourself some questions. In this post, you will find the first of many questions to ask, as we guide you on this journey.
Starting with the short video below created by Realtor.com, it provides a look at 5 questions that you should ask yourself before taking on a fixer-upper. Beyond the video, let's explore these questions and more, to give you something to think about as you ponder this purchase.
Question 1: What is my motivation?
As we mentioned above, are you buying this home to renovate to be your home or an investment to rent (short or long term,) or to sell for profit? Beyond getting a well-priced home, be sure that you fully understand your end goal, as this will guide your entire process from finding the home to understanding your budget.
Question 2: Where am I going to live during the renovations?
Based on your motivation answer above, this is a question that needs to be answered and examined. If this will be your home, don't give your landlord your notice yet or put your home on the market - if that is possible.
If you want to live in the home during the renovation, be aware that you may not be able to do this, if you plan to gut each bathroom. Even if you think it can be done in stages, your contractor will want to do all of them at the same time. In order to utilize his time and to keep your labor costs down, it is best for him to do it that way. Plus living there during construction will challenge every part of your being... and relationship or family life. Trust us, you will spend time and money repairing your relationships later if you do this.
Question 3: What is my remodeling budget?
Let's talk about the least favorite part about renovation, your Budget! It is suggested that you get multiple quotes from contractors or professionals to have an understanding of the average cost in your area. Don't rely on any information you see online for other cities or areas of the country, as costs are different from city to city, and state to state.
It is also best to have the contractor tour the home to give them a full look at what you are asking them to quote. They will point out areas that you may not have noticed that need work, where a basic phone conversation will not address this. Hidden costs are everywhere, so be prepared to pad your budget in almost every area.
Question 4: How am I going to pay for all of this?
Are you planning to pay for the renovation outside of the purchase of the home or do you want to incorporate it into the financing? There are construction or home improvement loans that work this way, but be aware that they can limit your renovation budget. Plus, you may not want to pay interest on these costs. To learn more about construction loans, be sure to consult your bank or lender to determine how their programs work, PRIOR to making an offer on a home.
If you have cash or plan to use credit cards for the renovations, be sure you understand how your contractors and vendors want to be paid. Some don't accept credit cards or you may have to move cash into an account where you can draw from.
Question 5: Am I prepared to manage this project?
Your time is precious and needs to be used wisely. Do you plan to manage this project from finding the home, purchasing, renovation and move-in? Don't be afraid to involve others in this process, such as a real estate agent, trusted lender, contractors, project managers, movers and beyond them.... family and friends!! Teamwork makes the Dreamwork!!
So, beyond the 5 questions from the video, I have one more to add.
Bonus Question: Should you hire an interior designer?
This question comes up regardless of your plans for the home (live in, rent or sell for profit,) as there is an additional cost for their services to include in the budget. Interior Designers provide value by utilizing their skills for selecting materials to build the look you want, while staying in budget. They utilize trade sources, such as tile, flooring, cabinetry, and plumbing to give you an advantage of unique materials to create your next home. They will also narrow down your selections, saving you time and money while keeping you on track. Shiny things tend to distract many homeowners, as well as second guessing design decisions after they've been installed. If you need to find a contractor, many designers already work with a trusted professional that they can recommend.
Consider hiring an interior designer a valuable cost of renovation to keep your project unique and on track. Overall, the time and potential mistakes, far outweigh their design cost. Many homeowners and investors will utilize designers on all their projects, so consider hiring one for your new home.
If I haven't scared you away from a fixer-upper, and you are ready to move onto the next steps, let's get started! First, I invite you to review my page about buying tools where you can sign up to receive my various buyer's guides. Next, let's connect to start talking about your goals. My contact information is at the bottom of each page.
©Copyright 2021 Reinvest In Orlando - Theresa M. Kraa, REALTOR®, NHCB
Reference Links
Buying Tools: https://www.reinvestinorlando.com/buyingtools