Is a “Fixer Upper” Right For You?
Purchasing a home at way below market value can seem like a dream come true. But before you take the plunge you may want to think about what you are really getting yourself into. The trick is finding real estate in Canada that is in need of cosmetic repairs as oppose to major renovations.
Watch Out For Major Repairs!
There are a few things you should be wary of when buying real estate that needs repairs. The first and most important thing to make sure the house has good “bones”. Structural damage and damage to the foundation are serious problems that can cost several thousand dollars to repair. Structural damage can max out your renovation budget in no time leaving you in the hole when it comes to the rest of the repairs.
You’ll also want to check out the roof. Look for water stains on the ceilings and other signs of roof damage like missing and curled shingles. Replacing the roof is another repair that can cost several thousand dollars. Other expensive problems to fix include plumbing, electrical and central AC/heat system replacement.
Creating a Repair Plan
Once you’ve ruled out the expensive fixes it’s time to take a realistic look at just how much everything will cost. Although things like replacing flooring, fixing sheetrock and painting are not too expensive on their own repairs will add up quickly.
You’ll need to come up with a plan that includes all the necessary repairs, the cost of each repair and a timeline for completion. Start with a notepad and go through the house making a list of every repair the home will need. Try to envision what you would like the home to look like when it’s complete so you don’t overlook anything. New fixtures, new cabinets, landscaping, and trim work are all things you’ll need to consider.
After you’ve gone through the home a few times and feel like you have a complete list of necessary repairs you can start to estimate how much it will all cost. If you’re replacing the floors or cabinets take measurements and head to your local home improvement store. You’ll want your estimate to be as accurate as possible concerning the cost of materials.
One of the most important things you’ll need to consider is the cost of labor. Oftentimes people purchase a fixer upper with the idea that they will be able to complete all of the renovations themselves. You need to be realistic about what you are capable of fixing. You may think you’ll be able to learn how to lay tile or hang sheetrock only to find out later that it’s more difficult than you thought. If this is your first attempt make sure you have a backup plan and factor the possibility of needing a contractor into the budget. It’s always better to come out under budget than over budget.
Last but not least consider the timeframe for completion. This is another common trap people fall into when dealing with a fixer upper. You’ll want to leave some room in your timeline for unforeseen problems. Work may be postponed for many reasons including weather, waiting on materials and problems with contractors. Having a timetable that’s too rigid can throw off even the best laid plans.
Overall buying a fixer upper can be a great investment if you do it right. Hire a licensed inspector and do your own inspection before you buy. Make sure you create a budget before you enter into contract to ensure that it will be a worthwhile project. There are plenty of homes for sale in Canada so don’t make a rash decision. Keep in mind that sometimes when a deal is too good to be true it is just that.
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