Factoring in the Real Cost of Buying a Fixer-Upper
BAHAMAS – A cost-effective way of owning a home for less is buying a fixer-upper. However, before you commit to purchasing, Rachel Pinder, principle broker at Island Living Real Estate, urges you to weigh the costs, as some renovations can be more expensive than you bargained for.
“These days, if you find a run-down home in a good neighborhood for less than market value, it’s a hard opportunity to pass up,” said Pinder, who specializes in Bahama real estate. “But there is a lot of risk involved in fixing up a home, which is why it is important to have a professional assess the home before you sign the paperwork.”
After a professional gives you a run down of the home, you need to map out how much you can afford, how much you want to offer and how much you need to invest in fixing the home.
Decide what you can do yourself
Most home improvement projects cost more than budgeted and take longer than expected. Sometimes the results can look less than professional. Things like painting, stripping wallpaper and changing light fixtures are simple. It’s the electrical, flooring and plumbing that are best left to experts.
“You may have the desire to tackle home improvement projects on your own, but lack the skills,” the Nassau Bahamas rental professional said. “This is where professionals come in handy. But before you hire someone, you need to decide whether you can stand living in a construction zone and if you can afford it.”
Factor remodeling projects and repairs into the offer
Bring a contractor to the home to get an estimate of how much the repairs and/or improvements will cost. If you’re doing it on your own, make a supply list and total the cost. Once you know your out-of-pocket cost, add another 20 percent for unforeseen problems. This will give you a rough idea of what you should offer.
Look into financing for the home
You will need to have money for a down payment for Nassau Properties, closing costs – unless seller agrees to pay for them-and repairs. Get yourself pre-approved and keep the cost of repairs in mind, but don’t over extend yourself. Make a list of repairs that must be done before moving in and then make a list of tasks that can be taken care of later. If your upfront costs are going to drain your savings, the house may not be worth it.
Research the market before making an offer
Find out what the fair market value of the property is – what the house would be worth if it was in good condition-then subtract the repair and remodeling costs.
“The best way to know if the home is right for you and your wallet is to have it professionally inspected,” said the provider of Nassau apartments for rent. “If you’ve only factored in surface repairs such as new floors or windows, but the inspector finds the home needs a new roof, it may be best to back out of the deal.”
In some cases you can ask the seller to make repairs or give you cash at closing to pay for the repairs, but this can only be done if you included inspection contingencies into your offer, said Pinder.
There are a lot of advantages to buying a fixer-upper, however it is important that you work with Nassau Realtors to determine if the investment is right for you.
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