With the cost of real estate in New Orleans continuing to rise, a fixer upper starts looking more and more attractive to some home buyers.
6 Tips for Buying a Fixer Upper
1. Determine your cost of repairs
Doing it yourself, provided you have the skills and the time, can save you a whole lot of money. But there are some things you shouldn’t tackle yourself: electrical, HVAC, roofing and plumbing come to mind.
2. Know the costs before making an offer
Whatever number you (and your contractor) come up with for repairs, assume that there will be cost overruns. Pad that number with an additional 10-20% to account for unforeseen problems when determining your highest and best offer. If the numbers don’t work, move on and find another property.
3. Don’t skip inspections
Even though you know that a property needs work, it’s critical to find out exactly what you’ll be facing. Thorough home, termite and plumbing inspections should be done. Your home inspector can let you know if they recommend a structural engineer for any foundation issues.
4. How will you pay for the repairs?
Know how financing can help you. An FHA 203(k) loan or a conventional purchase/renovation loan can allow you to wrap your renovation costs into your mortgage if you don’t have the cash on hand to make all of the changes. Your lender is the best source of information for what loan suits your budget and needs.
5. Prepare for the unexpected
Hidden termite damage. Faulty wiring behind the walls. An electrical panel that’s not big enough for everything you want to add to the house. I’ve never seen a renovation job that didn’t uncover something unexpected.
6. Don’t forget the permits
It can be tempting to forego permits if all of your work is interior. Not only is this illegal, but it can come back to bite you years down the road when you attempt to sell and have to disclose that alterations were made without permits.