Are you interested in buying a fixer-upper as your first step into the real estate market? You are not alone: Almost one in five people have opted to undertake the task of renovating a house from the bottom up. However, home renovations can be expensive, and you’ll need a plan in order to take full advantage of a fixer-upper’s cheaper initial purchase price. Read on for tips on affordably creating the house of your dreams.
Save Money Early On
The best place to save money is at the beginning. By carefully choosing a house in a good location at a low purchase point, you could significantly reduce your investment. Most fixer-upper homes cost 8 to 10 percent less than standard, move-in ready homes. While you can hire a real estate agent to help you find an ideal fixer-upper, skip the fee and look for one yourself by searching for unkempt houses or foreclosures in your region. As a rule, don’t upgrade your house much more than the neighborhood’s standard to preserve your investment. With luck and timing, you can also find great deals at foreclosure auctions.
Also, keep in mind that the home’s location will drastically affect its cost; while a rural house may cost several hundred thousand dollars, a house in a large urban center will cost much more. (For instance, the average listing price for a fixer-upper in Chicago, Illinois is $999,000.) A better location might be worth it if you aim to sell the house after the renovation is completed; however, if you plan to make this property your permanent home, choose a location that fits your preferences.
Prepare for Major and Incidental Costs Alike
Once you’ve found a house, hire a general inspector to check all aspects of the property. An inspection is a necessary expense that will enable you to plan out your renovation and save money by reducing the amount of unexpected costs hidden in the home. Before making the final deal, calculate the total amount you will likely spend based on the sale price and the inspection report. Last, you’ll want to incorporate the cost of tools into your budget. A set of power tools will help the renovation move more smoothly. At the very least, have a powerful drill, a jigsaw for freehand cuts, and a circular saw for more precise cuts. Look out for unnecessary attachments that add to their price, and consider used tools for a slightly discounted rate.
Prioritize the Steps in Your Renovation
Once you have purchased your new fixer-upper, take a moment to organize yourself. Planning out the renovation process as precisely as possible will give you more peace of mind and help keep you under budget by diminishing the risk of getting sidetracked with a large but unnecessary subproject. Decide how much you’d like to spend in your renovation, then add a 15 percent safety net. Finally, organize your projects by priority. (Having a functional and safe electrical system is more important than installing a top-of-the-line countertop, for example.) Making the home structurally sound, with working plumbing and electrical systems is critical, but buyers will expect that. On average, smaller touches make more of an impact and add more value than large projects, like new windows, which are great for opening up the house but can be expensive.
Be Smart with Your Purchases
During demolition, take care not to damage the house’s existing pieces -- cabinets can be repainted, doors can be repaired, and little touches like freshly painted trim and clean windows help to make a great first impression. Finally, when decorating, if you like a particular painting or set of curtains, try finding them at a lower price elsewhere or on clearance. Don’t rush into a purchase; do your research first to find the best deals.
Renovating a home doesn’t have to be a wallet-snapping endeavor. With proper preparation, research, and care, you can create the house of your dreams and still come in under budget. Finally, when designing, remember to choose projects that will combine to form the best possible impression for a potential buyer.