Thinking of buying that cottage-country fixer-upper for a steal? It can be a lucrative investment, as well as an adventure! Whether you’re the handy type or not, there are several things that can go wrong with your fixer-upper purchase and turn it from a profitable project into a financially and emotionally-devastating disaster. After all, we’ve seen the TV shows and we know what can go wrong…right? Let’s look at these top 5 tips to consider so that your home or cottage fixer-upper project is a success:
- Do the research before you buy
When buying any home, it’s important to know the real estate market in your preferred neighbourhood, as well as any future developments in the works, by-laws, community news, and so on. Is the neighbourhood school or shopping mall closing? Is a condo being built down the road? With a fixer-upper, it’s even more important to look to the future because you’ll want to get a return on your investment after spending so much time and money on renovations.
- Pay attention to the home inspection
A thorough home inspection is never more important than when buying a fixer-upper! If there are serious structural or other costly renovations that you didn’t bargain for (such as electrical or plumbing overhauls), you can back out of the deal before it’s too late.
An inspection report will not only reveal big-ticket repairs needed, but you’ll also gain great insights into all the issues with the property so you can prioritize accordingly.
- Learn the local laws
You could come across unexpected surprises if you aren’t aware of local by-laws. For example, your home could have a ‘historical’ designation that limits certain renovations, or it could be zoned so that you can’t rent out the basement, expand the driveway, have an inground pool, and so on. You also need to know the legalities around construction permits and other municipal by-laws that could impact your investment. To get started, work with an experienced, local realtor and real estate lawyer who knows the area, as well as talk to the appropriate municipal staff.
- Understand the finances
The odds of any home renovation coming in under budget or even on budget are pretty slim! The more that’s needed, the more that can go wrong and throw even the most financially prepared off course. You don’t want to be drowning in debt or dealing with high-interest credit cards for years after your purchase; your goal is to come out ahead, not behind. Have a financial plan in place that allows for at least 10% more wiggle room for emergencies. Further, shop around for contractors, materials and supplies, and keep track of all estimates, purchases, transactions and contracts. Think of your project as a small business and leave no stone unturned.
- Choose your projects wisely
When prioritizing your fixer-upper jobs, keep in mind that you want to choose jobs that will see a solid return on your investment when it comes time to sell, such as updated kitchens, bathrooms, flooring, windows and roofs. These cosmetic changes are less costly than big structural changes such as foundation repairs or adding another storey. Additionally, extravagant or elaborate renovations may not increase the home’s value if they aren’t appealing to potential buyers or aren’t in line with what’s going on in your neighbourhood.
It’s also important to remember that real estate markets can be volatile, and what you thought you could get for your fixer-upper after renovating might not be the case in months or years from now. This is where your careful planning and research comes in when deciding what type of repairs and renovations you want to take on. If the fixer-upper needs too much fixing for your budget and time-frame, you can continue your search until you find the best match.
When choosing a fixer-upper, make sure you’re clear on your short term and long term goals, and plan for the unexpected – financial, legal, and structural! The best way to protect yourself and your investment is to work with a real estate lawyer who knows the ropes. At Ares Law, it’s our job to guide you through the entire process, from the initial offer and purchase agreement to surveys, closing details and even drafting contracts with your contracting team. Connect with us today at 705-645-8743 and let’s get started on turning your fixer-upper into a dream home!
