If you’re planning on creating and customizing your dream home, there are several benefits of purchasing a fixer-upper house. But before you make this major investment in time and money, it’s important to consider the reality of fixing up an existing home — it’s not always a simple process.
If you approach the project with preparation and strategy, however, you can convert an older house into a beautiful home for your family to grow in, or you can even turn a profit on the housing market. With that in mind, let’s go over some things you should take into consideration before you buy a fixer-upper home.
Hire a home inspector
A home inspector is a must-have if you’re purchasing a fixer-upper home. They will walk through your property, help you detect structural damage, and root out common issues found in older homes, such as asbestos and termite infestations. A home inspector can even provide you with suggestions on things that should be replaced or renovated, like electrical wiring, plumbing and roofing.
Recruit an architect or contractor
If you can afford to do so, you should consider bringing on an architect or contractor to assess your fixer-upper. They will be able to detect load-bearing walls and find out if and how you are able to properly restructure and renovate your property.
Did you know that there are renovation-specific mortgages made for homebuyers, like you, who plan to substantially renovate a fixer-upper home? These specialty mortgages, like EZ “C”onventional Repair Escrow, FHA 203K renovation loan and HomeStyle® Renovation, just to name a few, are intended to help homebuyers best manage renovation costs, as well as protect homebuyers from additional financial strain due to unexpected emergency construction costs. Your loan expert can help you find the right mortgage for your fixer-upper home.
Research tax incentives*
In addition to the standard property tax deductions homeowners are eligible for, you could be eligible for other home-related tax benefits, such as:
Check for zoning restrictions
Ready to turn that run-down property into gold? Better hold your horses. Many properties have zoning requirements, which could limit how you can renovate your fixer-upper. To find out a home’s zoning requirements, you’ll need to do a little research by visiting the area’s municipality website, or you can contact an official who will help you navigate the zoning specifics.
Get a building permit
To ensure compliance with building codes, you will need to acquire a permit before you begin renovating your property. Without a permit, you could face serious delays and fines for violating city regulations. States and cities have varying requirements for issuing permits, so you will need to contact your local permit service center, or hire a permit service to manage the building permit application process on your behalf.
Home office tax deduction
Building a home office that is used regularly and exclusively for business could allow you to make rent and utilities partially deductible.
Solar power tax credits
Installing solar energy panels can not only boost your property’s value, it can also provide you with a significant tax credit.
Overall, renovating a fixer-upper is not for the faint of heart (or wallet). But if you’ve found a property that’s in a great location and simply needs a little TLC, it could be a worthwhile investment for you and your family. Ready to start your fixer-upper project? PrimeLending offers a wide range of renovation home loans that can assist you in creating your perfect home. Contact a PrimeLending mortgage professional near you today to find out more.
*PrimeLending is not authorized to give tax advice. Please consult your tax adviser for tax advice for your specific situation.