If you’re in the market to buy a fixer-upper, there are a few things to be on the lookout for in order to help ensure you don’t fall into the dreaded money-pit. When it comes to home renovations, things can go from bad to worse in a flash, and turn your profitable project into a big personal and financial headache. Whether you’re interested in flipping the house or making it your ‘forever home’, there are a few key things that any savvy home-buyer should know before purchasing a home that needs work. Let’s break them down:
- Know what you can and can’t do
When you first look into that new listing for a fixer-upper, make sure you know what local by-laws are in place and what you can and cannot build/renovate/upgrade. For example, if you want to sever a lot, rent out the basement, build a 2-storey boathouse, or put in a pool or pond, you should make sure your local by-laws support that, and that you have the right permits. Further, you’ll want to research future developments in the neighbourhood and find out if any ‘deal-breakers’ are in the works that might impact your enjoyment of the home or your investment. Your real estate sales rep and your real estate lawyer can help you get started on your research.
- Get a thorough home inspection
Your home inspector will give you a detailed report of each area of the home they assessed and list suggested repairs – both small and large. It will also alert you to any safety or health issues with the property, and give you a great starting point to decide if you want to move ahead with the purchase or not. Don’t buy if you aren’t ready to move forward with the suggestions in the inspection report.
- Plan, budget, then budget some more
We’ve all seen the shows on TV where the home renovation goes wrong; the budget is blown, the project delayed, and a few ‘must-haves’ get crossed off the list as a result. To help avoid that happening to you, you’ll need to do the leg-work to help cut costs and stay on track. Plan to spend an additional 10-20% for ‘unexpected expenses’ – you’ll need it. Further, work closely with your contractors so that you are aware of issues along the way and can strategize accordingly. You’ll also save money if you take time to shop around for the best prices on tools, building supplies and so on. The more organized you are, the better you can track your spending and find ways to save.
- Follow the money
If you want your home to have a strong resale value (who doesn’t?!), make sure you renovate accordingly. Don’t blow your budget on big-ticket, elaborate items that other potential home buyers won’t appreciate, but spend it instead on cosmetic upgrades such as bathrooms, kitchens, doors, windows, basements and floors. These types of repairs will help get the best return on your investment. Look at what’s selling in your neighbourhood and what the sought-after features are before starting on your fixer-upper.
It’s naturally very stressful to buy a home that needs months or years’ worth of work before it’s move-in ready. This is why you should make sure you’re prepared both financially and personally so that your project is more successful! Work with a top team of professionals who know the business, including your contractor, lender, realtor and real estate lawyer. Plan for some obstacles and glitches along the way, and know what you’re getting into from the start. Here at Ares Law, we specialize in real estate law and we are here to help you with your big fixer-upper purchase. Don’t get in over your head without talking to our expert team; we’re here to protect you and your investment. Call our Parry Sound office at 705-746-6444; we can’t wait to work with you!
