The key is to understand the buying process and then to have a plan, including what repairs to tackle first. Below are tips on finding the fixer-upper home of your dreams.

Finding a Fixer-Upper in Your Area

For your first home, it’s best to look for a property with good bones that only needs cosmetic work. Location drives salability, and this is especially important when thinking of a fixer upper’s resale value. It’s wise to work with a real estate professional who is familiar with your chosen area and is a sharp negotiator. An experienced realtor will help you find a moneymaker vs. a money pit and will recognize all the things you need to avoid such as lead paint, asbestos and mold. They’ll also know the best resources in your area such as specialized inspectors, general contractors, etc., and the average listing price for fixer-uppers in the area where you want to buy.

Do the Math

When you find a home that’s speaking to you, add up all the costs to renovate the property based on a thorough assessment of the house’s condition. This should include materials and labor. Subtract this from the home’s likely market value after renovation, drawn from comparable real estate prices in the neighborhood. Then, deduct at least another 5 to 10 percent as a cushion for any unforeseen issues. This will not only determine if your house will be a good investment but whether or not you can afford it in the first place.

Research loan options

Along with affording the house, you’ll need to figure out what loan to take out. The variety of options for first-time buyers can be overwhelming, but researching the terms of each one and their associated interest rates is a good way to sort out your options. With conventional loans, for example, you’ll have flexible term options, but the longer the term, the higher the interest rate. A 15-year term, for instance, includes a 3.250% interest rate, while a 30-year term yields 3.750% in interest.

Doing DIY or Going Pro

One of the biggest perks of buying a fixer-upper is the price. Keeping expenses down often means doing most of the remodeling and repairs yourself. Sometimes, though, you’ll actually save money by having a professional do the work rather than doing it yourself. Professionals can get the job done quickly and get it done right the first time. Your financial gain can go down the drain if you make costly mistakes or unnecessary delays.

Don’t even think about going DIY when it comes to any electrical work, plumbing, or dealing with HVAC systems (unless you’re a professional). The best DIY projects are of the cosmetic variety such as painting, landscaping or even pitching in to help the contractor as part of his or her labor force.

For DIY work, you’ll also need to invest in some quality drills, hammers (which you can buy as a set on Amazon for less than $50), and other tools. Here are the five tools that Chip Gaines from the show “Fixer Upper” swears by.

First Things First

When it comes to return on investment (ROI), the best design or repair projects to tackle first are drywall repairs, painting and floor refinishing. Next comes updating lighting fixtures, doors, window shutters and siding, as well as updating kitchens and bathrooms.

Home Sweet Home?

You may have originally planned on flipping the house, but now you’re having second thoughts. What you may have thought of as merely an investment is now feeling like home sweet home. With the low property taxes and the prime location you chose, there could be worse conundrums, right?

If you’ve decided to call the fixer-upper your own, you’ll need to factor in the logistics of moving in addition to renovations. For instance, your belongings could become damaged in the midst of working on the property if they’re not kept safe in storage. Research local storage facilities to find a right-sized unit for your belongings. In Lake Havasu City, storage units are being rented out for an average of $69 per month.

Gallons of paint and days of sweat equity later, your fixer-upper will one day be a dream home. Whether you choose to stay or go, you can feel pride in how you transformed your diamond in the rough into such a stunner. You may even find this new hobby of yours habit-forming.

Guest Post by Tina Martin

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