Buying Your First Home: Invest in a Fixer-Upper
The process of buying your first home or investment property can be difficult to navigate. A fixer-upper is an excellent way to break into the market. With a little guidance and a bit of research, you can make the venture easier. House Pro Home Inspections offers these tips to help you get started.
Prepare Your Finances
Even with a fixer-upper, you’ll need a down payment ready when you buy. Most mortgages require at least 20 percent of the total home’s price, so assemble your budget before you begin looking. Your annual income and monthly expenses will dictate your price range. You’ll also need to take into account the current average APR before you make any decisions, as this will affect your affordability. In addition to the down payment, you’ll need to pay several other fees such as closing costs. Make sure you have enough saved to cover these.
When building your budget, think about what your monthly payments will include, such as your mortgage, insurance costs, and taxes. You don’t want these to exceed more than one-third of your salary. You’ll need a good credit score to get a good mortgage with a low APR. There are options when it comes to your loan, such as fixed rates and longer terms. Usually, a fixed-rate 20-year loan is a safe choice.
What to Look for
Ultimately, your budget will dictate what you can afford. However, especially when buying a fixer-upper, there are other things to consider. You will probably want something that is near your current residence so you can tackle renovations without much of a commute. And regardless of whether this is for you to live in or rent out, look for a property close to good schools, preferred amenities or public transportation lines.
It’s also crucial to be aware of the complexities of the fixer-upper you’re purchasing. No matter what, you want something with a good foundation. As this is your first purchase, focus on something you can manage with relative ease; this means a complete teardown will most likely be unwise. Rather, choose something with cosmetic or basic flaws that may make it less appealing on the current market but not too difficult to update. And regardless of what you choose, a professional home inspection through House Pro Home Inspections is a must to avoid any deal-breaking problems.
Fix It Up
Once you close, it’s time to start with the repairs. Apply for any required permits before you start to avoid hefty finds. You’ll also need quality tools such as power saws and hammers. Then you can get to work; start with the top, and work your way down. Is the roof in good condition? If it is, move inside. Do you want to remodel? Knock down any walls or make any large changes before moving to the smaller things including repairing walls, painting, and replacing any damaged flooring.
Once the big projects have been finished, focus on the smaller things. Update the sinks, the door handles and other fixtures to give your home the look you desire. Don’t be afraid to hire a contractor when you need them. Simply make sure they are reputable and have good reviews.
With repairs out of the way comes the fun part: decorating your new property if you plan to take up residence. Indeed, it can be tempting to want to go all out here, especially if this is your first successful home renovation project. However, know that you actually don’t have to burn through your home improvement budget to get high-quality, classic, and classy furniture that will stand the test of time.
Instead of heading straight to your nearby luxury furniture store, consider exploring vintage or thrift stores and online marketplaces to find secondhand furniture. You will find valuable pieces that may seem a little worse for wear at first glance but actually have great bones.
If you’re an investment property owner, the next step is to find tenants. However, before you add your listing to rental sites, be sure to determine a competitive rental price, a preferred lease template, confirm how you will perform background checks, and consider setting yourself up as a NY LLC. The latter will provide you with tax advantages, but most important, you’ll have personal asset protection, which is crucial in the event of a legal dispute. Once you’re ready to list, take quality photos, and create a compelling listing.
There is much to consider before diving into the homeowner’s market. Even with a fixer-upper, you want to be in good standing financially. However, once you have your budget and a solid plan, this can be one of the most exciting times of your life.
Image Courtesy of Unsplash