Sometimes when you purchase a fixer-upper, the home is in such poor condition that there is immediate work that needs to be done to make the house habitable.
For example, if the sewer lines are clogged, or have collapsed, and water is draining back into your basement, that’s a situation you’ll have to address immediately. Or, if there is a moisture problem inside the home and mold is growing on the walls, you’ll want to fix the problem and start scrubbing the walls with a mixture of bleach and water.
Many folks who buy fixer-uppers can’t imagine living in a house that isn’t finished. So when they move in, they spend thousands of dollars trying to improve the home. But architects say that money might be more effectively spent if you live a little in the home first, and think about what changes you want to make before hiring a contractor or architect.
One of the biggest mistakes homeowners make is trying to turn their house into something it will never be, agents say. If a home has 8-foot ceilings and small rooms, you can raise the height of the doorways, and you can take down no-load bearing walls to help give the room a larger, more gracious feel. But the ceilings will always be 8 feet tall.
Since few homeowners have unlimited cash to spend, planning a renovation can make a world of difference. Here are some suggestions that will help your renovation a success financially as well as aesthetically.
Develop short-term and long-term goals for the property.
How long do you plan to live in this home? A short-term stay might be five years or less. Mid-term stays would be 5 to 8 years and if you plan to be there longer than 8 years, you’ll be in the home long enough to do some significant improvements, enjoy them and perhaps even profit from them when you sell.
Once you figure out how long you’ll be there, then you can develop some short-term and long-term renovation goals. A short-term goal might be to paint and recarpet the interior of the home, and put up inexpensive window treatments. A long-term goal might be to renovate the kitchen and add on a family room and bath.
Although there may be some overlap, the idea is to take what you’ve done short-term and build on it for future long-term projects.
Make all decisions ahead of time.
Once you have a plan in mind, you should start making all of the decisions necessary for your project. Why plan ahead? First, changing your mind is relatively inexpensive when the drawings are on paper. Once you start building, the cost to change items adds up quickly.
If you’re shopping for tile or appliances at the last minute, and they don’t have what you want in stock, you’ll either have to buy what the company does have in stock, or pay fees for faster delivery.
Finally, if you have everything you need before you start your renovation, including tile, appliances, bathroom fixtures, and hardware, your renovation will unfold much more smoothly, which often translates into less expensively.
If it only has to last 5 years, don’t buy the top of the line.
If you’re buying for the long-term or for resale, you want to make sure what you buy will hold up. On the other hand, you don’t necessarily want to spend the money to buy a $10,000 stove if you’re only doing a minor upgrade to your kitchen and don’t plan to stay there for more than a few years.
Why? You only get so much payback for completing a renovation project if you sell within the first year, real estate agents say. Whether you spend $15 per gallon or $30 per gallon on white paint, you’ll get the same return on your dollar. If you spend $40,000 to remodel your kitchen and sell 8 months later, you might only get 50 cents on the dollar.
However, if you’re doing a short-term renovation but are planning for a long-term renovation, and you get an amazing deal on something that will last and can be reused, then buy it. But don’t look to spend money you might never recoup.
Don’t make improvements that won’t appeal to a majority of buyers.
A home buyer went to see an expensive apartment recently. She said it was gorgeous, except that the homeowner chose to put a wall of windows facing out over an alley instead of over the tree-lined street. The homeowner liked it because they could add a little balcony with seating.
But this and other strange choices the homeowner made when constructing the unit has made it virtually impossible to sell.
When doing short-term or long-term renovations, try to make decisions that will appeal to the largest part of the market. A painting mistake is easily fixed. But spending thousands on built-in furniture might make your home difficult to sell both now and in the future.
Do some or all of the work yourself.
If you want to build in value to your home, consider doing some or all of the work yourself. While there is a tradeoff between the time you spend and the money you save (and it may be less than you think), there are jobs you can do that will save you money, like painting, installing locks and door knobs or even changing toilets.
Don’t rely on your contractor or sub-contractors for the best pricing.
Many contractors pay wholesale for appliances and fixtures, only to turn around and charge you a small “purchase fee” or simply knock up the cost to you. Buying items can be a profit center for many contractors.
Instead, buy your appliances, fixtures, and countertops yourself. Approach wholesale companies and home improvement warehouses to find the best deal. Negotiate prices. Ask everyone for a discount.
Some home improvement companies will give you a 10 percent off coupon if you open up their store credit card. If you buy $7,500 worth of appliances, fixtures, hardware, plywood, paint, and drywall at the same time, you’ve just saved yourself $750.
Keep track of everything you spend.
It’s your money, and no one is going to care about it as much as you do. So keep track of everything that gets spent during your renovation projects. Using financial software like Quicken or Microsoft Money will help tremendously, and provide you with a detailed list of expenses when the time comes to sell your home.
Published: Jan 22, 2001