Can you afford that fixer upper? Whether you’re flipping a house to sell or renovating to achieve your dream home, fixing up a house can be quite the challenge. From an unsteady foundation to leaky pipes, there’s a variety of problems that could take a big bite out of your budget. But with a proper plan in place, restoring a home to its original beauty is incredibly rewarding and keeps excess building materials from landfills. Before you plummet through the floorboards of a hopeless Money Pit like Tom Hanks and Shelley Long, follow these five tips to develop a plan for turning a fixer-upper house into the home of your dreams.
Step #1: Hire a Quality Home Inspector
Prior to touring the house, know what to look for when buying a home, as well as what questions you should ask your realtor. Before you pull the trigger and buy a fixer-upper house, always find a quality home inspector first. The inspector will outline all the problem areas of the home to give you a better idea of what you’re getting into.
Look up inspectors near you through the American Society of Home Inspectors (ASHI) directory. Make sure to find an inspector who can provide proof of licensing and who has at least three years of full-time experience.
Step #2: Establish a Budget for Your Fixer-Upper House
Without a solid budget intact, it’s quite possible that your bank account will have you seeing red. The cost of repairs adds up fast. Before you bite off more than you can chew, take the entire list of the necessary repairs into account. After that, determine whether the time and cost of repairs is worth your while.
Brandon Turner, Senior Editor and Community Manager of BiggerPockets, notes two vital numbers to nail down when buying a fixer-upper:
- After Repair Value (ARV): The price the home should sell for after fixing it up, even if you don’t plan to flip it.
- Rehab Costs: The total cost of each renovation project.
“A good real estate agent can help you establish your ARV, but for the rehab costs, you’ll need to do some homework,” Brandon said. To determine the rehab costs, Brandon suggests creating an organized list of projects, or scope of work, broken down into categories.
Your project list might look something like this:
- Exterior paint
- Interior paint
Next, you’ll need to research how much each category should cost. Some of these costs can be easily determined, but others might require guidance from a professional contractor.
Step #3: Consult Multiple Contractors
Once you’ve determined the scope of work for your fixer upper house, it’s time to gather quotes from various contractors. It’s important to compare costs to find the most reliable contractor who can fix up your old house on time and to your liking. You might choose to hire one general contractor to oversee the whole project, or you could hire numerous subcontractors and manage them yourself. You might even choose to take on the some of your project list yourself.
Step #4: Choose Projects to DIY
After reviewing contractor costs, you might decide to tackle some projects on your own to save money on your fixer-upper journey. And we admire the bravery. For DIY tips on projects like painting and landscaping to more tricky tasks like plumbing and electrical, check out our Exceedingly Comprehensive Guide to DIY Home Improvement before you begin.
Step #5: Create Your Project Timeline
Determine which projects need to happen first and which ones can be saved for last. Be sure to allow enough time for each project to be completed. Set realistic expectations for yourself and your contractors. Also, accept that the timeline might change as the process evolves.
“What are the most important things you want remodeled, and what things are not as big of a deal? Get comfortable with the ‘final appearance’ before you even begin work, or you may end up spending much more than anticipated.”
Brandon Turner | Senior Editor & Community Manager, BiggerPockets
Following these five steps will ensure that your decision to renovate a fixer-upper house is a commitment that you and your bank account can handle.
Take a look at our Home Project Guides to walk you through the process. Have you renovated a fixer upper or flipped a home? Let us know about your experience in the comments below!