Deciding whether to purchase a fixer-upper or go with a home in need of fewer repairs isn’talways simple.
Supplies, Labor and Time: Whether you do the job yourself or hire outside labor, repairs andrenovations are notorious for costing more than you planned. If the home can’t be lived in whilerepairs are made, the additional cost of covering the mortgage, taxes and insurance while thehome is vacant can also substantially add to the total cost.
Taxes and Insurance: Improvements often add to the cost of property taxes and insurance, sobe sure to consider the long-term consequences. Properly performed repairs and renovationsmay help or hurt property tax values and homeowner insurance costs. It’s a good idea to get anestimate in advance. On the other hand, hiring outside crews to perform needed repairs can resultin a tax write-off for investment properties.
Long-Term Profit Potential: Repairs and renovations can make your home more valuable, butonly if the surrounding area is desirable. Whether investing for long-term appreciation or cashflow, carefully evaluate the desirability of the neighborhood.
Financing: Lenders often have different rates and requirements for properties in need of repair.Find out in advance if you are eligible for special funding, grants or tax incentives, especiallywhen working with affordable housing options or first-time homebuyer programs.
Building Codes and Zoning: It is imperative to understand local building codes and zoningregulations before purchasing a fixer-upper. Never assume you can modify a structure withoutconsidering the building code. Likewise, zoning may dramatically alter the ability to use aproperty in a specific manner or make certain changes or additions.
Condo living often elicits images of carefree weekends sitting beside the pool, but there are somepros and cons to consider before making a purchase.
