Things to consider before buying a “Fixer Upper”

Fixerupperblog

Purchasing a fixer-upper seems like a great idea for a variety of reasons.  Maybe its your first home, or you are low on cash, or maybe you just love the challenge of DIY.  “This won’t be so bad”, you think to yourself.  Fix the flooring, change out some light fixtures and we are good to go!  For us, it was simple math.  We needed a house of a certain size, because I have four little cuties who need space to roam.  In order to have a house of that size on one salary, we were left with exactly 1 option within 30 miles of my husbands new job.

Thats right folks, simple math.  So we jumped in with cautious optimism.  We are pro’s after all, right?  WRONG.  This isn’t our first “fixing” journey together.  Actually this is our 4th home in our 12 years of Marriage, and the 3rd one that we will have remodeled floor to ceiling.  So we thought we knew what we were in for.  Its been 6 months now and we have spent a lot of time and a lot of money, but we still have a LONG way to go before we will feel at home in this house.  So I have some words of advice on how to avoid some of the mess we have been through.  If I could rewind 6 months, I would still buy this house.  I would do it with trepidation and maybe more caution and less optimism, but for me its still simple math.

The important thing is you have to go into this eyes open.  Each time you look at a house seriously, consider the following items, before you purchase!  I could write pages about how to choose a house, but that isn’t the purpose of this post.  My job here is to help you decide whether to take the next step and move forward with the purchase you are considering.

1. Evaluate your resources

No matter how much you love a house, you have to be realistic about whether you can afford the repairs necessary.  Look at your financing options before anything else.  Here are some of the options you might want to consider.

Making a smaller downpayment and setting aside some cash for repairs up front

Taking out a piggyback loan

Applying for a Home Equity Loan, or Line of Credit

Making repairs a little at a time using any extra money you may have in your budget

Using other resources like Retirement Accounts, etc (Rarely a wise choice)

You want to know whats available to you up front, so you can quickly walk away from a deal that might leave you house poor and STILL unable to afford necessary repairs.

2. Know your NEEDS

Once you know your budget, and you’ve selected a home, get a Home Inspection.  You may think you don’t need an one, since the house is going to need work anyway.  Maybe they are selling it “as-is”, or the buyers are unwilling to negotiate on price.  Ditch the assumtion that this is about negotiating a better deal, and focus on what the house will NEED.  Meet the inspector at the house, and ask LOTS of questions.  Take a notebook and jot down things that stand out to you.  Be thorough, because your home inspector may miss something that YOU notice. Once you receive the Home Inspection report, compile your list of NEEDS for the house, and tally up what you estimate it will cost you to have these items repaired.  Home

3. Know your WANTS

Now is where you get to dream a little bit.  Go through and imagine everything you would do to the house if you could.  “New Flooring throughout”,”Knock down this wall”, “put in a skylight here”, etc etc.  Then go to your favorite Home Improvement Store and shop around.  Write down prices of things you like, and compile your WISH LIST.  Now prioritize that list and decide which things HAVE to be done to make you feel comfortable in the house, and add that to your NEED list.  The rest of your list is fun to dream about, but you need to understand up front what is realistic for now, and what will have to come in time.

4. Know the Consequences

I call it the “cookie” Rule.  You know that adorable story where you give a mouse a cookie, and he just keeps wanting more?  Yeah- the same rule will ALWAYS apply to remodeling.  For instance, I really want to knock down a wall in this bathroom.

Oldbathroom

Its so tiny!  You can barely turn around in there without bumping into a wall and there is only one sink with like 2 inches of counterspace on each side.  Did I mention I have 4 kids?  Well we have a large useless closet next to the bathroom, and I want to knock it out, and almost double my bathroom space.  Problem?  If we tear down the wall, we will have to repair the drywall, and frame in where the door in the hallway leads to that useless closet.  Then we will have to replace the floor (which needs it anyway).  If we replace the floor we have to change out the toilet and the vanity because they are not only ancient, they aren’t functioning well.  If we do that, we will probably end up pulling out the heavy cast iron tub, and that would mean re-tiling the walls.  Thats all probably going to require replacing the old plumbing, which will probably require at least 7 trips to Lowes Home Improvement to get every part we will inevitably forget. See where I am going with this?  Its never just “knock down a wall”.  But some things can’t be done without doing it all. Point is? Try to think of every consequence.

5. Know your limits

We all want to believe we can DIY everything, but you need to be realistic when you are deciding what you are going to do yourself in a house.  Can you handle things like flooring, drywall, painting, etc?  Probably!  However you should leave things like electrical work to the experts!  Maybe you hate painting, and will hire a professional for that.  Be sure to include that in your cost tally.  Also take the time involved into consideration.  Do you have 2-3 days to work on each project or oversee a contractor?

6. Prepare for the Unexpected

On top of that 20% extra, you should add on a good cushion for things that are unexpected. And I’m not talking about little things like a faucet breaking, or plumbing leaks that need to be repaired here and there.  I am talking about discovering the beautiful trees in your yard are destroying your Foundation, Well, and Septic Tank and need to be removed.  4000$ YIKES  Or the HVAC system that stops working mid-January, and you discover you need an entire new system/ductwork/etc.  $9000 DOUBLE YIKES!  Yes People, trust me…you will every penny of that cushion.

7. Know your Math

You have got to know how much cash will be necessary to finish up your NEED list.  So write it all down, tally it up, and tack on 20%.  You will ALWAYS need more money than you think.  Compare the number you come up with, to the amount of money you have available and decide whether this is something you can realistically handle.  This is a great time to re-evaluate your need list and see if some things can be bumped back in priority a bit.  For example, this is my kitchen right after moving in.

KitchenfloorThat nasty 1970’s linoleum was one of the first things on my priority list.

Guess who still has 1970’s nasty linoleum 6 months later? Me.  I have had to put off what is merely a cosmetic project, in favor of things that HAD to be done, like electrical work and plumbing.

8. Look at your options and decide whether to move forward

Making the decision to purchase a “fixer upper” can be rewarding in the long run.  You will have an amazing feeling of accomplishment each time you walk over that flooring you put down yourself, or those kitchen cabinets you resurfaced, and you will feel good knowing you did it “yourself”

Here is a picture of my kitchen now, and I love it (minus the floor).  It cost me next to nothing (except time) to update it, and it makes me smile, everyday.

NewKitchen

For the Record, my kitchen is always creative…but rarely clean :)

Evaluate all of your options, and make an informed decision based on the information you have gathered.  If you do decide you to jump in and fix-up a “fixer- Upper” I wish you all the best!

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