Fixing a fixer upper to create a dream house can be a very romantic notion. How great to say to yourself and to others that you and/or your client created something wonderful out of nothing that your client or you actually live in or to sell at a whooping profit.
Before your client or you as an investor get lost in the romance of creating a dream house, know that fixing up a fixer upper is NOT as easy as it looks to be on reality TV.
Here are some national average costs for some BASIC, SIMPLE projects that your client or you as a real estate investor will likely have to pay for, assuming your client (or you) is not a roofer, plumber, electrician, foundation specialist, etc.
Roof repair $865.
Foundation repairs average a cost of $4,000. Look for problems such as
Gaps/ruptures in the foundation
Buckling, sagging, sloping foundation floors/walls
Fractures/cracks can be horizontal, vertical, zigzagging
Roof replacements average a cost of $7,200. Different materials and different locations around the country have different price points so this national cost average for a roof replacement can easily skyrocket.
Faulty roofs can lead to leaks, mold, mildew, structural damage, electrical problems, etc. Make sure your client knows to pay attention to the roof…you too. Things to look for are
Missing or curling shingles
Broken or buckling shingles
Clawing shingles on the bottom corners
Plumbing problems (clogs, corrosion, leaks) are usually found underneath floors and/or behind cabinets. Notice
Toilets/tubs that don’t drain
Water where it doesn’t belong
A new water main runs approximately $1,500; new pipes and installation run approximately $1,500. Faulty sewer lines and septic tank issues are not included here.
Electrical problems are not to be ignored under any circumstances, as they can become fire hazards. Things to look for include
Outlets that are hot to the touch, buzz or have char marks
Feeling a vibration, shock, buzz when plugging in an appliance
Breakers that trip often
Aluminum wiring installed in 1960’s-70’s outdated and
National average cost to upgrade/replace an electrical panel runs approximately $1,100; to upgrade/replace electrical wiring runs approximately $1,300; replacing an outlet runs approximately $200.
Now, before presenting an offer to buy this soon-to-be wonderful house, do your best to help your client determine the market value of the home post renovations. Do a comparative analysis of similar homes that sold in the neighborhood. Subtract the renovation costs PLUS 10% – 20% for UNFORESEEN REPAIRS/REPLACEMENTS. This amount ought to be the maximum your client (or you) put into this house to make it the dream house your client wants it to be. Go over that amount and your client (or you) will only be reducing the amount of money that will go into your client’s (or yours) when and if the house is resold.