As a first-time homebuyer, you probably have a dream list of what your house will look like and all the amenities it should have. Your ideal home, however, may not be within financial reach, but a fixer-upper could be.
Initial Steps in Searching for Real Estate
One of the first things to do when buying is to get pre-approval with a mortgage lender. This gives you a limit on the purchase price you can get financing on. Being able to find a home below this limit will save you money on your monthly mortgage payment. Consider working with a mortgage broker who knows what the area’s lenders are offering and will shop around to get you the best rate.
Partner with The Ford Group as they have expertise in your desired market areas. Based on your budget, the agent will show you homes that fit your needs as well as fixer-uppers to compare with turnkey abodes. You will gain an understanding of the property value within certain areas and be more in tune with how you can beautify the ugly duckling in the higher-valued neighborhoods.
Understand Your Limitations
When looking at places that need tender loving care, know what you can do yourself and what you will have to hire a professional to do. An outdated house may only need sanding, painting, and flooring which you can do yourself. Replacing windows, roofing, plumbing, and electrical are repairs best left to professionals. Calculate the cost of hiring versus your time and expense in materials as well as your safety. Based on these factors and your budget, you will be able to make a smart purchase offer.
Tackling leaks, plumbing, electrical and flooring is a good start. Getting the construction projects out of the way allows you to do a cleanup and prepare the home for easier projects like painting and less messy design jobs.
Buy to Sell or Rent
If investing in real estate to flip and resell quickly is your goal, consider establishing a business so you can enjoy tax deductions. If you are handy and know contractors you can trust, buying homes to turn into vacation destinations or rental housing is a venture worth considering. Check out forming a limited liability company to protect personal assets. If you’re employing employees or contractors, it’s a good idea to register for a tax identification number or EIN for easy reporting. Your real estate agent will work with you to find various investments and renters as your business grows.
Rental properties, whether for short-term or long-term tenants can be lucrative as well. According to experts, the rental market is strong, and between 30 and 40% of people rent rather than buy. Do your research on the market area to estimate rental income and what you can expect for monthly rent.
Finding a dull gem in your desired neighborhood may not be your shiny diamond today, but it can be down the road. No house is perfect, but a run-down, outdated one can be custom-made to fit your every need and make it your long-term dream home. Whether you plan to stay and call it home or bring it back to its former glory and sell quickly for a profit or rent out, take time to study your investment. Just with any business, be organized, operate within a budget and work with professionals who will help you grow.