Sometimes a fixer-upper can be a great bargain. Other times, it can be a money pit. How do you know which you are getting? There is no way to be 100% certain, but you can do research and inspections to make an informed decision about whether to take a risk on an older home in need of work. Here are some recommendations to guide you.
Calculate the Margin You Could Save
Start by getting the home thoroughly inspected. Based on the findings, calculate an estimate for repairs, and add a 10% to 20% buffer. Add that on to the cost of the home, and then compare it to similar homes in better condition in the same area. Is the total cost above, below, or in line with that of similar homes that don’t need all that work?
Ideally, the cost should be below that of similar homes that are already in good shape. If it’s the same, you aren’t getting a bargain, just extra work. If it’s more, then you are getting ripped off.
Watch Out for Critical Problems
Something else you may ant to do is steer clear of properties that have severe damage to the following:
- Foundation
- Roof
- HVAC
- Plumbing
- Electrical
Repairs to these can cost tens of thousands of dollars, and there may be associated problems like water damage and mold that could cost many thousands of dollars more.
This does not mean you should never consider a fixer-upper with issues in these areas. It just means that you should exercise a great deal of caution, and make certain you have the budget for it.
Make Sure You are Ready
Last but not least, you should assess whether you yourself are prepared for what it truly means to buy a fixer-upper. Fixer-uppers can be very rewarding projects, but they typically require more money, time, and labor than many homebuyers realize at the outset.
Assume that your fixer-upper will require many months of work, and will cost more than you envision. Think about the chaos that will disrupt your daily life for a while. If you are prepared for that, then you may be ready to buy a fixer-upper. If you are not, you may want to look at homes that do not need as much work instead.
Buy and Renovate a Home in Chicago
MidAmerica Bancorp can help you buy and renovate a home anywhere in the Chicagoland area or throughout Illinois. We also work with homebuyers and homeowners in FL, IN, MI, TN and WI. To get started, please give us a call at (708) 237-4052 to schedule your consultation.
