Do you have any tips on buying a fixer upper for long term?

Answer to: Do you have any tips on buying a fixer upper for long term?

Do I? I have a trunk full. We bought our house during the last big dip in the economy back in 1988. Prices took a dip and we thought interest rates were low…but not as low as they are now. These days in most markets except Canada prices are low and so are interest rates.

It is a good time to buy on price and that is good because that never changes. However watch out for interest rates…they will rise as you are buying long term. Make sure that you protect yourself from the coming rises in interest rates. Lock in the low rate for long term. On your budget keep payments in the 20% to 25% range of your income. Lenders will still give a mortgage that demands 30% to 40% of your income. If interest rates go up you get murdered on your cash flow.

It is good that you are buying long term. Selling a house costs a lot of money and the bills are paid from your accumulated equity. That equity can be put to work in much more prosperous ways. Find a place where you plan to stay for a long time.

As far as buying a fixer upper I would suggest finding a “finisher offer” as a better option. Many new homes are built on a strict budget. The bank will only loan the builder “X” number of dollars so they build a good house but go cheap on the finishing. When the original owners go to sell it they cannot get top dollar because the finishing is cheap. The nice thing about this sort of situation is that you don’t mind ripping out cheap materials. A fixer upper to me means major work undoing someone else’s bad work before you can start beautifying “your place”. That takes a lot of energy and a lot of money for basically nothing.

Another tip is a version of the seven degrees of separation. Within your network of people on earth you are a maximum of 6.6 degrees away from someone who know how to upgrade your house properly. Hire that person to help you through the challenges of upgrading your home. Hire good advice and then listen to it. If you are that person look no further.

Find high quality building products at huge discounts. If you are going to fix this house up fix it up really nice. If you cannot find what you want here you at least know where the line is when you are offered a bargain somewhere else. You can buy nice products and reduce your spending from what would be normal for a renovation or you can have much nicer products for the normal cost of a renovation.

Buy an old truck and at the very least you can save 15% to 20% by being the go-fer, the garbage guy and do the pickups of the building materials that you have found at a bargain price.

This is a big decision so research thoroughly. Here are some other referals for tips:

Always use the Thinkyourmoney big 3 when making your deicisions.

Negotiate well.

Mortgage Advice.