Thinking about buying a home that needs some work? Maybe you want to flip it, rent it out, or just build fast equity. Whatever the reason, there are several pitfalls to look out for in order to avoid potential problems and costly mistakes. Some of the most common pitfalls to be aware of include:
- Underestimating the cost of repairs: It’s important to get a detailed estimate of the repair costs you plan to make and to factor in the cost of any unexpected repairs. Make sure to have a home inspector evaluate the home and give you a thorough report of what needs to be done. Research the costs of those repairs and plan on things going wrong and costing more.
- Not getting the right permits: Before beginning any renovations, make sure that you have the proper permits and approvals in place. Failure to do so can result in fines, legal issues, and even the need to undo work that has already been done or a lower value when you try to sell the home.
- Not factoring in the cost of labor: In addition to the cost of materials, factor in the cost of labor when planning your renovations. Hiring professionals can be more expensive but it can also save you time and money in the long run. This is especially true for electrical, plumbing, or other complex systems.
- Not being aware of zoning laws and regulations: Before purchasing a fixer-upper, it’s important to be aware of any zoning laws and regulations that may affect the property, such as rules around building size and setbacks, zoning for specific uses, and zoning for specific types of structures.
- Not factoring in the timeline of the renovation: Renovations usually take longer than you expect. It’s important to be prepared for delays. Be realistic about the amount of time and work that will be required to complete the renovation. Make sure you have a contingency plan in place.
- Not taking into account the neighborhood, location, and value of the property: A fixer-upper in a good location, with a strong potential for appreciation, can be a great investment. However, a fixer-upper in a declining neighborhood may not be a wise investment. Consult with a real estate agent with experience helping clients in the specific area you are considering.
Be aware of these pitfalls so you can make an informed decision about whether a fixer-upper is the right choice for you. Take steps to avoid potential problems and costly mistakes.
Need help buying a fixer-upper or investment property? Give us a call at 919-887-5114 today. We’ve got decades of experience helping people find and buy fixer-uppers.