An older home that needs extensive renovations may mean extra repair costs. If you don’t have cash on hand, you may need to look at special loan products, such as an FHA 203 loan, which is a special type of loan that includes repair expenses. Another option is to secure a separate home improvement loan after you have purchased the property.
Should the home require extensive work, you must determine if you can live in the home during renovations or if you will need to rent until the work is completed. While there are usually other rooms that you can live in temporarily, if the renovations are excessive, it may not be good for your health to live around the paint chips, and other hazardous materials. This is also something to keep in mind.
If you purchase a historic property, you will have to make sure it is not protected by any regulations or preservation requirements that may limit the type and scope of work that can be completed. This is often something that many homebuyers do not look up; and it can be a costly mistake, as you will have to edit, or completely un-do it.
When considering an older home, look closely to identify all potential issues. In addition to the obvious items, you may find some hidden internal problems, as well. Before making a purchase, it’s a good idea to have a professional inspect the home to pinpoint any possible problems. Be on the lookout for:
•Heating and cooling system
•Rotting wood and termite damage
•Roof leaks and damaged gutters
•Doors and windows that need replacing
Once you have identified any issues with the home, you will have to decide if you can and will do the work yourself or if you will need to hire experts. In certain situations, you will be legally required to have a licensed contractor perform the work.
It’s also important to get estimates on the work before committing to the house so you can decide if the property is worth the expense. This may include getting an appraisal based on the current state of the property and its expected value after the renovations are completed.
Many older homes used lead paint and insulation that included asbestos. These two serious hazards must be dealt with by professionals if they are found during renovations. Also, if you know the hazards exist, you may be legally required to disclose those facts if you ever sell your home. You may want to speak with a real estate lawyer.
When looking at buying an older home, you must decide how much you can afford to invest in renovations. Create a contingency budget in case repairs are more than expected or other issues are found.
To get the most value out of the property, consider how you can make updates while still retaining the home’s character. This may include decorating as well as making structural changes. The choices you make can affect the resale value and the ability to attract buyers.
Buying an older home can be challenging, but it can also be rewarding. The key is to plan ahead, know your budget and be prepared for the unexpected.
For further reading, try this article about 10 Things I Wish I Knew Before Buying an Old House; as well as, Top Defects to Look Out For When Buying an Older Home