So you have looked all over for a diamond in the rough, walked through just about every property that came up on the market that needed some love and elbow grease. You have a Pinterest Board created and devoted soley to renovation…you know the posts about making cabinets from a stack of pallets found behind the local Mall. Yeah…you’re pickin’ up what I’m puttin’ down…You are ready, you can do this…you want to buy a home that has “good bones” but needs some TLC. Sweat equity..it has a nice ring to it….am I right???
I have one thing to say to you…Join the club, we have tool belts! I sell real estate and I too have a Pinterest Board, What? I’m only human! Plus renovating a home has always sort of been a dream of mine…let’s call it a bucket list line item. So….One of my first sales as a newly minted real estate agent was also a purchase. We bought a Victorian 4-plex apartment building. It needed some love in a big way, and I’m not talking about paint and carpet, I’m talking about repairing lathe and plaster, putting in new kitchens and bathrooms (clawfoot tubs literally weigh a ton) and reconfiguring the spaces.
Anyway….I’m here to offer up some useful tips I learned dipping my toe into the investment/fixer property business.
1. Have a plan.
2. Stick to your plan (this is HUGE)
Just think of it like this…every time you get a great idea and change your mind midstream on the work being done, it’s like taking a $100 bill and lighting it on fire….it burns bright for a few seconds…provides a tiny bit of warmth, but in the end the cost far outweighs the benefit. To avoid burning your money for no good reason, have a plan that you have worked out with your contractor, and stick as close as possible to that plan…trust me…you’ll thank me later…you’re welcome.
3. Shop contactors
4. Check references (again HUGE)
Before I was a real estate agent, I was an HR professional. So reference checking is as natural as breathing air to me. Don’t be shy. Ask for past customer names and call them. I will give you some advice, when it comes to resumes, many (not all) but many individuals will put lipstick on that pig…it may look pretty at first glance, but when you start digging…it’s not quite what you thought it was. Unless you know the person and trust their work, take the time to check them out…it is time well spent.
5. Keep it simple
6. Shop for prices
7. Have a budget (add at least 15% for contingencies)
8. Be realistic
If your project is an investment property, remember that and shop accordingly. If you’re going to live in your project home, make a list of “must haves” and “just wants” …as the costs begin to rise, this list will come in handy. You have a plan, you have a contractor, you have shopped for pricing …budget and add a bit for those contingencies…like for when you discover that the floor joist has rotted and snapped in half under the laundry room….nice! I love surprises…don’t you??
I speak from experince. We have been working on our Victorian since May 2014. We recently finished remodeling the upper floor and both apartments rented quickly. We learned a great deal about how the process works. We just started renovating the bottom floor a few weeks ago, and I must say the process is going much more smoothly this time around. We made a plan, we are sticking to it, we hired a great crew, and we are keeping it simple and realistic. Giant learning curve, but well worth the effort.
If you are thinking about getting a fixer, there are plenty out there. If you prepare and budget, you can change that sow’s ear into a silk purse….and that is a fact.
Valerie Reed, Realtor Associate