Don’t judge a book by its cover; you’ve heard that expression before, right? A similar adage that applies to real estate is “Don’t judge a home by its price.” An attractively priced fixer-upper may, in reality, require extensive work that drives up the final price tag significantly. If you know the issues and the costs associated with fixing them, purchasing a home in need of repair can be a terrific investment. That’s why it’s so important to complete your due diligence before committing to anything in writing.

Learn the Facts
If you’re looking to invest in a fixer-upper, do your research to avoid buying a money hole. Make sure the home has a clean past by having your agent investigate the area. To what extent has it been sold and resold, and how often? For how long has it been available to the public? Is the seller disclosing any information? When looking into a potential fixer-upper, you can also consult local property records for further information. Has a foreclosure been put on the property? Does the property have any encumbrances? What kinds of construction permits have been requested for this location? All of these specifics might help paint a picture of the house and its history for you.

Budget for the Repairs
After inspecting the property, you should have your contractor provide you with a rough estimate of the necessary repairs and upgrades and the associated costs (labor and materials included). If you want to make a bid on the house, you’ll need to include these costs in your offer. Make sure they’re as complete and precise as possible.

Valuation of the House in the Future is Estimated
If you want to make sure the house is a wise purchase, you should find out what it’s worth once the necessary repairs and upgrades have been made. If you ask your local realtor for some data on recent sales in the area, they must be able to help you determine a fair price. Follow the 70% rule when making an offer on a fixer-upper to sell it later. If you want to make a profit, you shouldn’t pay more than 70% of the home’s after-repair value (after deducting the cost of repairs).

Familiarize Yourself with the Regional Market
In addition, if you plan to sell your home within the next few years, you should make an effort to familiarize yourself with the local real estate market. Is there a market for the house after you fix it? Taking into account its current condition and your planned improvements, do you think it will sell? Will it appeal to the tastes of people in the area? Will it appreciate and provide a satisfactory return on investment? Again, your representative can be of great assistance here.

Have a Thorough Home Inspection Done
Make sure to have a competent home inspector look over the property as soon as possible during the inspection period after submitting an offer. If you live in Texas, Georgetown, a roofing company will provide you with a comprehensive report outlining the home’s flaws, deficiencies, and safety dangers; you can use this information to bargain with the seller or withdraw from the sale altogether. As a bonus, it makes a wonderful “punch list” for your contractor to use as they finish up the job. (You ought to also have them revise their repair estimate in light of this.)

Consider the Big Picture While Deciding Whether or Not to Purchase a Fixer-Upper
Finally, take a seat and take in the big view. Do the home’s necessary repairs, improvements, and prices fit within your budget now that you have a more complete picture of them? Exactly how long is your timeline, exactly? Have you got time to make all the required adjustments and repairs? Can you live there while the work is being done, or do you have to stay somewhere else till it’s done? You should acquire the input of your professional allies, such as the home inspector, the builder, and the real estate agent.

Conclusion
Fixer-uppers can be tempting because of their low starting prices, but they can end up costing substantially more than expected. Before putting anything in writing, make sure you’ve done your research. Think about getting a contractor’s opinion on how much money will be needed for upgrades and repairs (labor and materials included). When making a deal on a fixer-upper to sell it later, the 70% rule should be used. Pay no more than seventy percent of the home’s estimated value once repairs are made. Have a qualified home inspector take a look at the area as soon as possible during the examination time.

Buying a Fixer Upper? Things to Know Before Signing by Hannah Boothe