What to Know Before Buying a Fixer-Upper

So you fell in love with a house that has "good bones" but requires some major maintenance work — now what? If you're still on the lookout for a fixer-upper, one of the easiest ways to find one is to work with a real estate agent. Agents can find homes that are on the multiple listing service (MLS) and some may not even be public yet. They can also help identify motivated sellers who are willing to let their homes go at an "as-is" price. 

A fixer-upper can be a great investment if you're looking to snag a home that's below market rate but will require a little work on your end. If it's your first time buying a fixer-upper, here are a few things to keep in mind while you're still in the planning process. 

You may qualify for a renovation loan.

As the name implies, a renovation loan is a loan that provides funds to homeowners that go towards renovations. There are a variety of different loan packages available when it comes to making renovations, from your typical personal loan to government-sponsored loans for low-income homeowners or homeowners in underdeveloped areas. Depending on your income, location and other factors, you could qualify for some type of home improvement loan, so it's worth looking into before you start construction.

A good home inspector is your best asset.

If you're looking at a fixer-upper, you're prepared for the possibility of structural issues, but you want to know the full extent of any existing damage or repairs that need to be done. If you're planning to fix up an older home, you can even find an inspector that specializes in historical builds. Inspectors will also likely be able to give you good advice on how to go about certain repairs and renovations, or how much they might cost before you get a quote from a contractor. 

If you need structural work done, consider hiring an engineer. 

If you happen to find out that there are major structural issues (i.e. issues with the plumbing, electrical wiring, foundation, framing, floors, walls or roof) you may need to call in a structural engineer. A good home inspector can tell you what work needs to be done, but a structural engineer can adequately assess the situation and offer a more concrete solution. 

Some renovations require permits.

Depending on the kind of work you're planning to do, you might need to obtain a permit from your local building department. Common renovations that would require a permit include installing decks, fencing or expanding your home. This isn't limited to just exterior renovations, however — certain plumbing and electrical work may require a permit as well. 

If the home you're interested in is in a historic or landmark district, this may also impact the type of permits needed before you start construction. Getting permits can be time-consuming, but you can always have a contractor arrange for them. 

Patience is key. 

Sometimes, no matter how much careful planning you put into your renovation projects, things can get delayed. Don't get discouraged — it's all part of the process. A home is an investment, and even move-in-ready homes can come with a lifetime of ongoing projects, updates and repairs. Planning out your renovations, setting a timeline and crafting your budget are all key aspects to buying a fixer-upper, but being flexible is just as important. 

Whether you're buying a home for yourself or fixing up a home to rent or sell, keep in mind your ultimate, most important goal — to breathe new life into a home that deserves a second chance. Good luck!