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Should You Buy A Fixer Upper Popular TV shows like Fixer Upper and Property Brothers have brought the charms of owning a fixer upper to light. A fixer-upper can be a great option if you are prepared for the experience of owning a house that needs work and time.

A house that needs work can be a great investment if you are ready to invest the time and money into it. On the other hand, buying a fixer upper might be a problem if you are not aware of what you are getting into.

Not sure if owning a fixer upper is worth it? Here are some considerations to think about.

Start With This Easy Equation

Start with the likely market value of the house after renovations will be made. Then, sum up the cost to renovate the home. Then, add another 25 percent to the renovation costs for unforeseen problems that will no doubt come up during the renovation process.

Next, subtract the renovation costs from the probable market value of the house after the renovations are made. Use similar real estate prices in the area to get your estimate.

What number is left? This number what you should offer.

So, if the comparable estimates are $100,000 and the house needs $25,000 in work, then you should offer no more than $75,000 to break even. Most professionals recommend deducting 10 percent from the asking price just to make the investment of time worthwhile.

Determine How You Will Pay

If you buy a fixer-upper, you’re going to need some way to fund the renovations. It can be hard coming up with the funds for repairs and upgrades after paying closing costs. Some options for funding renovations include a renovation loan, like Fannie Mae’s HomeStyle Loan. This loan is rolled right into your mortgage, which makes things easier.

Another popular option is an FHA 203(k) loan. This loan is a little easier to qualify for than the Fannie Mae HomeStyle Loan and it only requires 3.5% down.

Decide If You Want To Invest The Time

Buying a fixer-upper is an investment. You will have to invest your time in making a lot of decisions. You’ll need to decide on things like building materials and aesthetics.

Do you have a design or architectural background? Do you enjoy remodeling projects? These are questions that you’ll really want to think about before buying a fixer upper.

Your trusted mortgage professional will be your best resource to help you secure the right financing for your new home project.

3 Things You Need to Consider Before Buying That Fixer-upper Home

What Will It Cost?

If you’re going into a home expecting a few renovations costs, a minor detail here or there may not add up to much. However, if you’re not interested in spending the big bucks on making changes, you’ll want to estimate an approximate amount of how much the renovations you don’t want to live without will amount to. By including all the necessary labor and materials, you’ll be able to determine if the price-point of your offer will be worth it. Keep in mind that if there are any serious issues with the house, it may not be worth your while to consider the purchase at all.

Will Renovations Increase The Value?

In the event that you’re buying a home for its investment value, it’s going to be particularly important to consider if the renovations required will actually increase its market value. While adding another bedroom or upgrading a bathroom may not add significantly to a home’s overall price, certain more inexpensive improvements like painting, refinishing and new siding can actually add a lot to the look (and worth) of your home.

How Much Are You Willing To Take On?

It’s easy to think that you’re prepared to do the dirty work when faced with a fixer-upper, but getting down to brass tacks may not be so simple when the time comes. Before taking on a home that needs a lot of renovation, consider how much you’re willing to do so that you can determine if fixing it up will even be an economic boon after all the labor that may go into it. If you’re not a DIY kind of person, you may want to avoid a house that has a long list of repairs.

A fixer-upper can be tempting for those who want to invest or save on a home purchase, but you’ll want to carefully consider if it will be a good choice when it comes to selling time. Contact o or more information.

Should You Buy A Fixer Upper?

3 Things You Need to Consider Before Buying That Fixer-Upper Home

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