Fixer-uppers are tempting prospects. Such properties often let you buy into a desirable neighbourhood below typical market value. That's because you're not buying a typical house.
Before purchasing a home to renovate, you must think carefully. Ask yourself: Will this house be worth the work I put in?
To find your answer, follow these three steps.
1. Add up the costs:
First, consider everything that needs to be done to the home. Always assume that more work will be required, rather than less. Add up all the estimated costs for materials and labour. If you plan on doing some of the work yourself, factor in your own labour costs as well.
Seeking the services of a professional building inspector helps a lot during this step. Their expertise and objective advice can ensure you're not missing any issues, and therefore costs, hidden behind the walls or under the roof.
2. Calculate the final value:
Regardless of whether you plan to sell the house or live in it, you need to estimate what the finished value will be. Search for comparable listings that have sold in your area to get a rough idea of what you could expect. Alternatively, ask a Century 21 Real Estate agent for their opinion.
3. Find the difference:
Finally, subtract the total estimated costs from the estimated final value. Subtract an extra 5-10% for unforeseen issues. The number you get should be the absolute upper limit of what you offer. Anything more, and what appears to be a great deal can easily turn into a money pit.
If that final number looks good to you, then that fixer-upper may be just what you've been looking for. Time to start planning your renovation.
Need expert property advice? Contact your local C21 agent today.