Wednesday, 14 February 2018
If you're flipping a property for the first time or renovating your current home, finding the funds for your “fixer upper" is an important step in bringing your dream home to reality.
Get an idea for the anticipated — and sometimes unexpected — costs before you make the commitment.
A fixer upper can be a sound investment for those who don't mind a little work or a house full of construction workers. Benefits can include:
Budgeting for home improvements can be tricky, especially with a fixer upper. Before you apply for a loan or finalize a renovation contract, walk through the home with an inspector and contractor (get tips for managing contractors) to assess every required cosmetic or structural issue. Get estimates for labor, cost of materials, and other expenses. Over-budgeting for unexpected costs is a good idea — because you never know what could be behind that wall you decide to tear down. Rule of thumb: “Add at least a 10 percent cushion into your budget to cover such surprises," says Consumer Reports.
Keep in mind that the costs provided below are averages provided by the National Association of Realtors. Speak with a contractor in your area to accurately budget for your renovation.
If your property is listed on the National Register of Historic Places, be sure to get required permits before making changes; otherwise, your renovation timeline may be disrupted for months.
You never know what you might find when you launch a renovations project. Understand the potential issues before you purchase—the charm of a historic home may come with more than you bargained for such as lead-based paint, asbestos, termite damage, moisture damage, and foundation or structural issues.
Renovation Permanent Loan: Ideal for major remodels, with loan amounts up to $5 million, a Renovation Permanent Loan is rolled into your mortgage loan once your project is complete. To qualify, you must work with an approved contractor—so DIY projects won't fit the scope.
Home Equity Loan or HELOC: Finance home improvement projects through the equity you've built in your existing home with a home equity loan or HELOC. Borrowing on your home's equity is generally more affordable than using a credit card or personal line of credit.
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