Not everyone wants a move-in ready home. There are many talented, hard-working, and smart Buyers who want a place to renovate and customize. Some people want to renovate so that they can create their perfect home while others see investment and revenue opportunities in a house. Buying a home that needs work can be a great way to get into a highly coveted area without exhausting your budget. Here are a few tips that I have learned during my years as Realtor and property owner on how to buy a property to renovate.
1. Get a detailed home inspection
Before you finalize the sale, be sure to get a detailed home inspection so that you can identify any issues that might affect your budget. Let the home inspector know your plans for the property and be there as they conduct the inspection. This gives you an opportunity to learn about the home and get guidance on how to approach some of the major renovations.
2. Do the math
After the property inspection is completed, go through the house and make a detailed list of the renovations and repairs that you plan to do. Cost out each one as accurately as possible. Ask your Realtor, reputable trades people, and home renovation experts for estimates on the various projects you have planned. Add up the costs of the home renovation and be sure to factor in a budget for unexpected expenses.
3. Take classes
There are a wide variety of home renovation classes available throughout the city. Take a look at your project list and figure out which jobs you want to tackle on your own. Look for classes or workshops that will help you learn proper techniques. Many of the large home improvement stores offer classes, as do some of the local post-secondary institutions. This can save you a great deal of time and money in the long run.
4. Get financing in place
You have a few options when it comes to paying for your renovations. You can use your savings or profits from the sale of another property. You can talk to your bank about a line of credit. You may be able to add the cost of the renovation to your mortgage. Be sure that you have adequate financing in place before you purchase the house. There is no worse feeling than getting halfway through a renovation and running out of money.
5. Be prepared to call in professionals
Unless you are a Jack or Jill of all trades, be prepared to get professional help for certain projects. Things like foundation repairs, plumbing, structural changes, or electrical work should be done with the proper permits and expertise.
6. Know what adds value
There are three types of renovations you need to be aware of. The first type are renovations that need to be done in order to ensure the house is a safe place to live. This includes things like roof repairs, structural repairs, and remediation. The second type of renovations are those that add value. This includes things like updating kitchens or adding additional useable space. The third type of renovation are things that are nice to have but do not really add value to the house. Your budget should be allocated mainly to the first two types of renovations.
7. Be prepared to walk away
Even though you may have found a house with great bones in your ideal location, be prepared to walk away from the deal. If you are buying in a hot market, consider letting a property go if you are discouraged from getting a home inspection or if the house has too many expensive problems. There will always be another house so there is no need to get into a situation that will drain your bank account.
Buying a home to renovate is definitely a different process than buying a move-in ready home. Use a Realtor that understands the renovation process or a Realtor who has been through the experience themselves. Did you recently buy a fixer upper? Tell us about your experience in the comments below! Check out Who to Call Calgary to find quality renovation professionals!
A special thanks to Kim Twohey with CIR Realty for being a guest contributor to the Who To Call blog.