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How to Purchase a Fixer-Upper as a First-Time Homebuyer
Perhaps you’ve been searching for your first home, and you’re toying with the idea of buying a fixer-upper. Purchasing a fixer-upper can be the ticket to affordable homeownership. If you need guidance, connecting with a knowledgeable real estate agent from Oil Town Realty will make your search easier! In the meantime, here are a few things to consider if you’re house hunting for a fixer-upper.
Understand the Risks
Buying a fixer-upper can be exciting. You’re getting a great deal on a house, you’ll have the chance to customize the property to your liking, and you get the satisfaction of taking on a challenge! But there are also risks that come with investing in a fixer-upper, so be prepared for potential pitfalls. If you plan to buy a home “as is,” you’ll want to talk to a lawyer first. In addition, you should pay close attention to the property inspection and check out the land records for any warning signs.
Find the Right Real Estate Agent
You might be tempted to start looking for a fixer-upper on your own, but working with a real estate agent will make the process much simpler. To find the right person, you’ll want to talk to a few experienced agents and ask some key questions. MoneySense recommends asking about references from their former clients, what they know about your target market, and how you should prepare for making a competitive offer.
Financing Your Home
When you’re buying a fixer-upper, you’re probably going to pay significantly less than you would for a new construction home. Therefore, you might be thinking about paying for the house in cash. Trusted Choice states that a cash purchase can help you save money on interest and closing costs, but handing over such a large sum of money at once might make you nervous. There are advantages and disadvantages to this method, so take time to consider whether you want to buy in cash or take out a mortgage.
Renovating Your Property
You’ve found the right fixer-upper, and now, it’s time to get started on repairs and cosmetic projects! You may be able to tackle some of these on your own if you know how to use the necessary tools and materials safely, but Zolo recommendsleaving any plumbing or electrical repairs to the professionals.
For projects that are outside of your skillsets, such as a kitchen or bath remodel you’ll need to work with contractors, so make sure to account for these costs in your home buying budget.
To Live In Or Not To Live In
If your plan all along has been to live in the property, this may prove difficult if you’re having major renovations. While there are ways to manage living at home through a significant remodel, it’s not for everyone. In which case your next best option is to find temporary housing. A short-term rental can be the perfect option, particularly if you find something in the same neighborhood where you bought your fixer-upper.
On the other end of the spectrum, many owners of fixer-uppers intend to turn their homes into short-term or long-term rentals. This can be a great way to generate income and paves the way for another fixer-upper opportunity. Just bear in mind that as a landlord, you’ll need to register as a business with the state. The easiest option is to choose an LLC, which is a great choice for landlords. You get to enjoy tax advantages, and your personal assets are protected.
Move-In or Sell?
Once you’re done renovating your property, and your house is finally move-in ready, you might be wondering if you should live there, or if you should sell and purchase a larger home for yourself.
While selling your renovated home could be a good way to earn money and buy a bigger house in a more desirable location, the decision ultimately comes down to how well your fixer-upper fits your current lifestyle. Can you envision yourself being happy there for five to ten years? Or do you already feel like you need more space? Answering these questions for yourself will help you come to the right conclusion. And if you are on the fence, your real estate agent can help you assess the market to determine whether it’s a good time or not.
Purchasing a fixer-upper could be the right decision for your future! If you’re in the market for a new home, and you’re unsatisfied with the new construction available within your price range, it might be time to think outside the box. Buying a fixer-upper can be a great way to save money and create your dream home.
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