You have been looking for a house for months, and you have discovered that finding a home suitable for six people and at an affordable price is not an easy task. But suddenly, one day, an ad catches your eye. It is a five bedroom, four bathrooms, fireplace, big yard, and huge basement house in a great neighborhood and at an incredible price, however, the last line of the ad reads: “fixer upper”.

So, it’s ok. It’s too good a deal to pass up. You know you can convince your family that this is the best option and you can all make some sacrifices to give the place a facelift and to imprint your family’s personality in it.

Many people have gotten into amazingly successful fixer upper projects and you can surely be one of them… However, you have to consider three critically important things before taking that step:

Is the property worth it?

In order to clearly assess this, you will need a professional. You can immediately see and feel when a property has potential, and if it does, go see it again with a good engineer, a quality contractor, and a top interior designer. Why? Because some problems will be obvious, like an outdated kitchen or peeling paint, but the biggest issues, like rotting wood, old plumbing, outdated wiring and foundation cracks may not be. Only a professional with experience can make an honest assessment and point out those unseen weaknesses which could turn your dream into a financial nightmare.

How much will you have to invest in fixing the place up?

If you are really into buying the place, get the professionals to give you a firm quote on how much the remodeling project will cost. Always add in a healthy contingency cost. Renovations are fraught with unforeseen problems and expenses. Add these costs to the house sale price—don’t forget to include all the costs such as closing fees, taxes, etc. and compare this total with the prices of other similar and better houses in the area. For example, if the house is listed at, let’s say, $250,000, and others around the neighborhood are being sold for around $340,000, and the remodeling estimates you receive comes in around $50,000, you may definitely have a winner!

Can you finance the fix up?

If you are buying the property and need to finance it with a mortgage, the bank will assess the place based on its current condition, not its potential value once remodeling is done. You may need a renovation loan so work the numbers through to make sure you can pay both loans without sacrificing your family’s lifestyle. These costs are in addition to any existing mortgages you may have if you plan on staying in your current home during the renovation.

 

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