How to Find Fixer Upper Homes
Fixer upper homes can be a great investment when you choose wisely.
Seek out homes that have good after renovation value (ARV). In other words, once you fix it up, the property value will be worth the investment. How do you know if a house has potential?
Location matters. For example, finding a gem in a neighborhood with an undesirable school district won’t be a good investment. It will be harder to sell and you may never recoup the money you sink into it. Instead, consider homes in popular, safe, or up-and-coming neighborhoods. Ideal locations are close to major employers, have restaurants or shopping nearby, and neighbors who maintain their property.
It’s also smart to purchase a house with only cosmetic blemishes like frayed rugs, torn wallpaper, or outdated fixtures. These fixes won’t break the bank—especially if you’re willing to DIY some of the upgrades.
Financing for Your Home Purchase
Wondering how to finance home renovation? Fortunately, renovation financing is available to those who qualify. With a renovation loan, you can finance your mortgage and home repairs at the same time, rolling them into one convenient payment.
Typically you’ll qualify for the amount your home will be worth post improvements. Renovation financing can help you pay for home improvements over the life of your mortgage instead of a large lump sum.
Things to Look for When Inspecting a Home
While home inspection is important for any buyer, it’s essential when buying a fixer upper. By learning more about the property’s condition, you’ll be better able to determine future renovation costs and your AVR. Some repairs and renovations may be cost prohibitive if you’re on a budget, so pay close attention to that inspection report. Ask your real estate agent to help you find a reputable inspector.
Here are a few important areas:
The Foundation of the Home
Foundation fixes are one of the more costly home repairs. A good inspector recommended by your real estate agent will check for cracks in the foundation, make sure the floors are level, and examine door frames and windows for signs of foundation issues. Cracks could result in water getting into the basement, and can also be a symptom of dangerous structural problems.
Inspect the Roof
Since roof problems can be both costly and hazardous, investing in a separate roof inspection helps you calculate your potential return on investment. The roof inspection should include a report on both the inside and outside of the home’s roof. The report should include any information on cracked or missing shingles, rotting eaves, and water pooling—and help you understand if you need repairs or a new roof.
Look for Mold
Mold means water problems throughout the home. Perhaps most importantly, mold negatively affects health, especially for those with allergies or breathing issues. Inspectors can often detect mold or mildew from their unpleasant odor. Be sure to find the root cause of the mold in the home by rechecking the plumbing, roof, and foundation. Mold removal without fixing the root cause will cause problems down the line.
Check for Wood Rot
Fungus and termites – two things you don’t want in your fixer upper! Inspectors look for both. Telltale signs include wood discoloration, crumbling around door or window frames, holes, or small piles of sawdust. Be sure the property is termite free before beginning renovations, otherwise your investment in beautiful new hardwood floors will be for naught.
Have the Major Systems Inspected
Last but not least, make sure your inspector checks all the major systems throughout the house, including heating, cooling, water, plumbing, and electrical. Test the systems and run appliances to see how things are functioning. For example, if you’re purchasing an older home, it may have electrical wires that aren’t up to code. This could put your home at risk for a fire.
Title Insurance for a Fixer Upper
It’s a good idea to purchase home title insurance for your fixer upper home. Home title insurance protects you from losing money on costs associated with title disputes. For example, it covers legal costs if someone contests that you’re the property’s rightful owner. Title disputes can arise from filing errors, forgery, undocumented easements, liens, or conflicting wills.
While it might be tempting to skip title insurance, it’s unwise to do so. The average cost is around $1,000 although it varies. Plus, lenders typically require home title insurance if you’re getting a mortgage.
To learn more, contact a professional at Trident Land Transfer Company. As part of the BHHS Fox & Roach family of companies, we’re here to provide everything a homebuyer needs.