Many real estate markets around the country are seeing an increase in home prices, along with a shortage of available inventory. With competition strong, and prices high, you might be tempted to save some money by taking on a home that “needs a little love”. The popularity of DIY type shows on various cable channels makes it seem so easy – and almost fun. You might be drawn to the idea of putting in a little sweat equity, to gain real equity down the road, and you’d get to put your own personal touches on the home. Sounds like a great plan, right?
Before you jump on the home renovation roller coaster, take a look at some of the considerations and “hidden costs” involved in updating a home.
Be realistic about your skills and abilities…
Home improvement projects can be broken down into a few main categories: cosmetic, moderate, and extensive. Cosmetic projects are mostly aesthetic, and can be accomplished by most home owners. Cosmetic projects would include painting, updating cabinet hardware, or upgrading appliances. Moderate projects include things like renovating a kitchen or bath, and may be beyond the scope of the average home owner, especially if you will be changing the layout of the room you’re renovating. Consider what you’re actually comfortable with, and what you would need to hire a contractor for. Having to contract work out to a professional can quickly eat away at your renovation budget. Any extensive projects that the home would require, such as a roof, windows, or anything structural, will require a professional contractor and you should consider the costs of that work before jumping in to a project home.
Know what you’re getting yourself into…
Assuming that you have had a home inspection done on the home you want to purchase – this is a must with any home, but especially important for homes that may need some work – make sure you “get the big picture”. If anything beyond simple cosmetic updates need to be done to the home, you will need to factor in costs that you might not have considered. Projects beyond aesthetic upgrades might require a permit from the city (which will cost you), and many municipalities regulate the types of home improvement waste that can be disposed of in regular trash collection. You might need to pay to rent a dumpster, or hire a company to take discarded building materials away. Depending on the age of the home you’re purchasing, and what updates have already been done, building codes may have changed. You might end up having to update more than you anticipated if it’s discovered that items are not up to code. Hiring a professional contractor may transfer many of these tasks and responsibilities on to them, but then you’ll be paying more for the contractor to do the work.
Plan for the unexpected…
While a home inspection and some research can go a long way to help you understand what a “fixer upper” home will need in terms of work, cost, and timeline, there are some things you just can’t plan for. You never know if a previous home owner did their own DIY projects that were done poorly, or even illegally, that you could end up paying the price for – figuratively and literally. There are also unforeseen obstacles that can cost you time and money – accidents happen in home improvement. If you tackle a project that you think you can handle yourself, then realize you’re in over your head, or worse – you actually damage the home in your attempt, you could be in trouble. Depending on what the “oops” is, you could cost yourself more money in repairs, or ultimately end up having to hire a contractor to do the work in the end. It’s always a wise idea to have room in your renovation budget for the unexpected.
When looking at potential fixer-upper type homes, it’s important to discuss your plans with your agent so they can help you find the best option for you. At Restaino & Associates, we maintain a concierge list of preferred vendors and contractors that can help if you are looking to buy a home that needs some love, and can help you understand the type of project you’re taking on.