Buying an Old House: Is It Really as Easy as it Looks?

Buying an Old House: Is It Really as Easy as it Looks?

Buying an Old House: Is It Really as Easy as it Looks?

From "This Old House" to "Flip This House," television has long romanticized the process of turning an old, rundown home into a beautifully renovated palace of construction wonders. Some potential buyers think, "Hey, just a little work, a lot of TLC, and I can make twice as much off this home as what I paid for it!" While it's possible, it is often a a much more laborious process than those highly edited TV shows would indicate. Without an entire crew of construction specialists and a producer's budget, fixing up an old home can require a lot of time and money. There is a way to do it carefully, however, and it starts with proper planning.
Choose the Home Wisely

Any purchase of an old home should start with a professional inspection. Real estate agent Daryl Bronniche said this is a vital step that should not be neglected.

"A qualified inspector will tell you if an older home is at least structurally sound," Bronniche said.

Slapping on a new coat of paint or sprucing up a weathered deck is much different from replacing a crumbling foundation. Your renovation plans probably don't include a wrecking ball. You want to be sure the home will last long enough for the improvements to be enjoyed and for the investment to pay off. There is no sense in putting a new kitchen in a home that will soon fall off its foundation. Not all old homes are worth saving.
Calculate Your Costs

When you make an offer on an old home you plan on fixing up, be sure to have any of the improvements you have in mind priced out by qualified construction companies. Whether you intend to do most of the work yourself or will hire a crew to carry out the repairs, Bronniche advised potential buyers to factor those costs into any offer they make.

Also keep in mind that most cost-effective home improvements fall somewhere between the cosmetic and the structural. New paint on the interior walls won't significantly increase the home's value. A new roof, new windows and new siding, however can increase the value substantially. Be sure the projects you choose offer the biggest bang for your buck. Construction consultant Lee Alley is in the process of fixing up his 1973 rambler with the intent of selling once the improvements are complete.

"I'm doing most of the work myself, so I'm saving a lot of money that would be paid for labor," Alley said. "You may not have my experience, but chances are you know someone who does and is willing to put a little work into your home. My brother-in-law taps my experience quite often."
Invest in "Sweat Equity"

It always helps to have a relative like Alley who can offer the expertise you need. However, keep in mind that in order to get the most out of your investment, you may have to roll up your sleeves and do a lot of work yourself. You don't want to see the home's value increase by a large percentage, only to be siphoned off by a number of contractors.

Before you sign that purchase agreement, it may be a good idea to read up on some common do-it-yourself home renovations. The Web has a plethora of videos you can watch to familiarize yourself with some tools of the trade, which will help the improvements go smoothly. Alley also suggested you find a trusted contractor who can inspect any project you finish yourself to be sure no major problems will arise. Speaking of tools of the trade, you may lack certain pieces of equipment that will be needed during some projects. A cost-effective way to get your hands on a gutter cutter or other, heavier, one-time-use piece of equipment is to rent them.
Consider Your Financing

Homes that require only superficial improvements can be fixed up over long periods, so you can start projects as your budget allows. In other cases, however, if the home is in need of immediate, large repairs such as new siding, a new roof, or new windows, you may find it hard to shell out the tens of thousands it will take to replace them.

A popular way to finance that fixer-upper is by obtaining a renovation loan. This can be secured at the same time as you qualify for your traditional mortgage. These loans are often only available to those with good credit, so be sure your credit history is blemish-free before you apply. Some states have programs to help you pay for needed repairs if you qualify. Always check with your local housing agencies to see if they have programs for reconstruction or renovation available.
Don't Forget About Insurance

Finding insurance for old homes can be tricky. It often costs more for a homeowners insurance policy on an old home. If the roof is more than 10 years old, your premium costs will increase. Old homes with fireplaces also pose significant risks and will affect your quote.

It's important to remember that an insurance company can deny a property damage claim if the destruction is as a result of a defect in the home that was known prior to your purchase. If there are structural problems in your home, those need to be repaired as soon as possible to avoid denial of any claims. Your insurance agent should also be kept up-to-date on any completed projects so your homeowners insurance policy rates can reflect, for example, the new roof.

Whenever you are looking for a homeowners insurance policy on an old home, it's a wise decision to enlist the services of an independent insurance agent. These agents, such as those on the Trusted Choice® network, can help you find a number of quotes from a variety of companies, ensuring you will find the best coverage for your older home at the most affordable rates.

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