Older homes have a lot of charm, but sometimes the cost to restore them can be sky high. The home may be the right size and located in a desirable neighborhood with a short commute to work, good schools and amenities that suit your lifestyle. And, if you love do-it-yourself projects too, buying one may seem like a dream come true. But getting that old home to where you want it to be takes time and money. Before you sign on the dotted line to buy an older home, understand what that restoration will really entail. Here’s what to consider:
What Can You Afford?
Older homes are often priced below market value to offset the difference you will spend on renovation costs. Before making an offer, talk to an architect and contractor to understand the costs and the extent of the work that you’ll have to do. Include the cost of materials and labor in your estimate. Since projects can easily run over budget, be sure to add in another 10%.
To determine whether buying the home will be worthwhile, add up the sales price and what you’ll spend on renovations and compare that number to the market value of comparable homes in the area. Be sure to include an inspection contingency in the contract so if there are major repairs, you can potentially negotiate the sales price or ask the seller to make these repairs. Also check to see what financing options may be available for homes that need major repairs. Lakeland Bank offers renovation loans
which allow you to roll the costs of repairs or upgrades into the mortgage for the home you are buying.
Can you anticipate hidden problems?
It’s important to realize that some problems may not arise until you start working on the home. A home in need of major structural improvements may have issues with core systems like plumbing, electrical, heating or the need for extensive roof and wall repairs. These repairs can turn that charming old home into a real money pit. Also, repairs associated with the home having lead paint, asbestos, or mold and mildew problems could be expensive and difficult to eradicate.
Can you move in right away?
You may not be able to move into your home for months if the home needs extensive renovation. If this is the case, make sure your budget will be able to cover the construction costs as well as the mortgage payment, taxes, insurance, utilities and maintenance expenses for the home you’re restoring. And, remember to include the rent and expenses for your temporary residence. If you decide to live in the home during construction, understand that you may not have a kitchen for a considerable amount of time and that you won’t be able to enjoy the house to the fullest for a while. Living in a home that’s under construction can be stressful and has unique challenges.
What projects do you want to do first?
Fixing structural issues is more expensive and work intensive than renovating a kitchen or bathroom. You’ll have to plan your projects to complete the major ones first, but also plan cosmetic improvements with the structural ones. If you need to replace the roof and want to add skylights, for example, do these two projects together to save time and money.
Do you enjoy DIY projects?
Doing work yourself can save money on labor. If you enjoy painting, spackling, hanging cabinets, installing trim, building decks or replacing windows, then tackling these projects might be right for you. However, many home improvements take time, and if you’re not able to allocate that time due to a busy work schedule, then you may want to consider hiring a professional for some projects.
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