How To Determine If You Should Purchase A Fixer-Upper
For some potential homeowners, simply seeing the word “fixer-upper” will cause them to run away from the home screaming. This term can bring pictures of rat-infested basements and crumbling foundations to mind.
However, if you apply a few basic concepts to your purchase, a fixer-upper can actually give you a good return on your investment. A New Jersey home loan can even be used to fix up a home you are interested in.
To start out, you need to appraise both the home and yourself. The appraisal of the home is obvious. If the repairs you will be required to make include the foundation, extensive plumbing and wiring or mold damage, you may want to reconsider. If the updates needed are mostly cosmetic, then you are in business. If you are applying for a New Jersey home loan, you may be required to get an appraisal done anyway.
If the closest you or your spouse has ever gotten to real construction work is watching ads for Home Depot, buying a fixer-upper is probably not for you. The real value in fixing up a house is that you do it yourself. Labor is usually the most expensive part of any remodeling project, so if you can do the work yourself you can really save. There may be some parts that you cannot do, but if you can do the majority of the work you will save the most money.
Follow these three tips for choosing the best fixer-upper in town:
Know the cost of the surrounding houses
Buy a house that costs much less than the other houses around it and the chances are that your renovations will bring the house up to or exceeding the value of the other houses. If you fix up a very nice home in a very dumpy neighborhood you will lose money.
Don’t buy cheap
Well, of course you are looking to buy cheap. But while you want to find a home for sale that has a cheap price tag, you do not want an overall cheap house. If every material used in constructing the home was cheap, it will take way more time and money than you have to get it up to standards.
Determine the extent of repairs needed
Cosmetic changes such as new flooring, painting and putting in new windows can raise the value of a home significantly. Having to lift the house and put a new basement under will be extremely expensive with relatively low return on your investment. This is why a home appraisal should be done before you sign the papers.
A New Jersey home loan can help you buy the fixer-upper you want. Then you can turn around and sell the home for more than you spent. This is a great way to build a little nest egg. Just remember to follow the tips mentioned here so you don’t find you have undertaken more than you can handle.
Image Credit: Vanessa Monfreda
Derek often likes to blog about real estate and home improvement. When he is not blogging, he is a real estate agent in North Jersey. The following article is for new jersey home loan.