My husband and I are currently in contract for our first home. As exciting as it is, it is also incredibly nerve-wrecking to watch money being pulled out of your bank account, schedule and attend meetings and fret over renovations that need to be made. We are hoping that this is a property we can fix-up and enjoy for at least the next few years. We were also okay with moving into places that may need some work, which is the type of co-op we ended up choosing. I have a dream that this will end up as a money-maker, but I am realistic and also would just love to break even at the end of it all.
When purchasing a home that needs repairs, you definitely need to consider how much you want to spend before you put an offer down on the property. Here are some important questions to keep in mind to determine whether or not you want to even take on a remodel:
1. Is it worth it?
- Do I plan on staying in the property long-term or do I plan on flipping the property?
- Is the house listed at a lower price than comps that have already been updated?
- Will renovations have any impact on the resale value of the home? Or will I out-price myself?
- How many things need to be renovated and at what cost? Are they expensive renovations or not?
2. Can I afford it?
- Do I have the money on-hand after purchasing the home? Or do I plan on taking out an additional loan?
- Do I need to put any of my purchases on credit?
- Are these renovations going to be upscale, middle of the line or a homeowner’s special?
- Are any of these renovations or updates that I can do myself or will I require contractors, permits, etc?
3. Can I Live With It?
- Will I be able to live in my home while renovations take place? Or do I need to stay elsewhere?
- Am I prepared to go without certain things on certain days?
As for us, we will be paying for our renovations out of our own pockets once all is said and done—we are not taking out any additional loans or putting anything on credit. For me, this is the only way to go.
How do you feel about the costs related to renovating your home? Are there any other considerations future homeowners should think about?
the thrifty spendthrift 
Wow…this is a really great list and questions that need to be asked for anybody considering this type of deal. My wife and I are looking for a new home and we’re hoping to find something that doesn’t need to be fixed up too much. I wish I was more handy and we could buy something that needs to be renovated but I’m a little nervous with tackling too many projects on my own (and I wouldn’t want to oursource it all while we’re living there).
Thanks! I wish we were more handy too but since we’re moving into a co-op, we’re a bit more restricted in terms of what we can or cannot do anyway.
It definitely is overwhelming—especially when you have a lot to do! Good luck!
Congrats on not having to take out any loans for the renovations. 🙂 We haven’t dealt with any of this so far, but we do have a “creepy bathtub” situation that will need to be dealt with after we move in. I’m not expecting it affect the resale value later on, it’s mainly for our own convenience.
Paying for the renovations up front will suck, since it will drain my savings even more after the down payment, but I think it will be a worthwhile investment for when we plan to sell the place.