Should You Renovate That Diamond in the Rough?

Salt Lake City Real Estate Video Blog with William Bustos

If you want to buy a home to renovate it, there are three things you need to know before you make that purchase. I will go over everything you need to know today.

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If you want to buy a property for the purpose of renovating it, there are three important things that you need to know before you make that purchase.

1. Not every home is a diamond in the rough. Sometimes a home may be too far gone to bring back to life, or it may cost too much to make the home comfortable to live in. Not every fixer-upper is worth shelling out money for. It might need work beyond your scope and budget.

I hate when I meet with sellers who want to sell the home they remodeled when they probably shouldn’t have invested so much in the home in the first place. For example, let’s say they bought the home for $200,000 and put in $50,000 worth of renovations. They would want to get at least $250,000 on the home sale, but neighboring properties in the area are selling for $225,000.

It’s such a terrible feeling when you meet with someone who has invested that much into the home and comparables don’t support that renovation. Before you buy that renovation property, make sure your Realtor looks at comparables to see what other renovated homes are selling for in that area. That way, you’ll know if you can get your return out of that property.

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Make sure you can get a return on your investment before buying the property.

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2. Make sure you order inspections. Usually, a fixer-upper is a foreclosure or as-is sale. A lot of the time, those sellers will not make any repairs or give you any concessions for needed repairs. In that case, it’s really important to know exactly what you are getting into when you purchase that home. Order a radon test, a mold test, and get everything inspected before you decide to buy the home.

3. How will you finance your renovations? Financing is always an important factor when purchasing a property, but it’s extra important when you buy a home to renovate. Traditional mortgages typically do not cover any repairs or updates. Most people aren’t excited about shelling out a bunch of cash for renovations on top of closing costs and down payments, so make sure that you have a good lump sum available for those renovations.

Renovating a home is a big decision, and I wish you the best of luck. I am always here to help you if you have any questions or concerns. Just give me a call or send me an email. I would be happy to help you!