When you buy a property, the goal is to spend less than or equal to its market value. This is true whether you buy it move-in ready or buy a fixer-upper. How do you know whether or not you are sinking your money in a money pit or on a valuable fixer-upper?
What's Your Budget?
For most first-time buyers, there isn't a lot of money in the budget for a full gut job. While it may be a good idea to knock down a wall or two and put new carpet in the living room, you don't want to have to replace the framework or spend time and money on the foundation. Therefore, you should set a firm budget ahead of time and do a good job inspecting a property before you buy it to ensure that you know what you are getting into.
What Are Nearby Homes for Sale Worth?
One goal when buying a fixer-upper is to find a rundown property in an otherwise desirable neighborhood. Therefore, if you see a house in need of rehab going for $50,000 when nearby homes are going for $200,000, you have a lot of room to work with. Even if you spent another $150,000, you would still do no worse than break even. Hopefully, the home will be worth much more than that with the new furnishings and other components added to it.
Who Is Doing the Work?
While you may want to do the work yourself, you may not have the time or expertise to do so correctly. Although doing work yourself saves on labor costs, not doing it properly costs more in the long run. Therefore, don't be afraid to pay for a professional contractor who knows how to do the job right and in a timely manner. If you have questions about home values and common safety concerns, check with your local real estate company. Foxfire Realty in Florida, specializes in these home inspection checks. Remember, your house is worth nothing if no one can live in it safely.
What's the Housing Market Like?
When you buy a home, you need to know that you can sell it in a timely manner if necessary. If you can't sell it, it doesn't matter how much the house is worth on paper. Therefore, it may be best to buy homes during down markets and look to sell when the market starts rising again. There is a fine line between a worthwhile fixer-upper and a new money pit. Knowing how much you will need to spend, how you will spend it and how much your property will be worth after it is renovated can help you determine whether or not to acquire a given home. Once you've determined if your home is indeed a fixer upper, look for budget friendly ways to increase your home's value.