First-time rehab home buyers seek an opportunity to save on their purchase, but this largely depends on a few critical factors. With such a purchase, you might already know the home’s electrical system is outdated. Or, that it’s not been well-maintained for years. So, it’s very important to understand that buying a home needing rehabilitation comes with several risks. This means having to avoid costly mistakes so you aren’t burdened with heavy buyer’s remorse.
5 First-Time Rehab Home Buyers Mistakes to Avoid
Rehab properties offer an ability to buy at a low price, leaving more money for renovation. That’s the ideal scenario but it’s one which can prove elusive. Real estate professionals and seasoned property investors know that money is made or lost at the buy. In other words, the real savings and net profit come with a really good deal. This holds true, even when it’s a rehab, foreclosure or short sale property.
Thinking about buying your first home? Before you can unlock the door to homeownership, you have to take some important first steps. From finding the perfect location to financing your purchase, shopping for your first home has challenges that go beyond curb appeal and interior features. Some of the important steps to homeownership include: Getting approved for a mortgage, choosing the right real estate agent and finding the right home that fits your budget. —Bankrate.com
For instance, you might find a rehab home and discover signs of a mold problem. To offset the mold remediation cost, you make an offer for a percentage which covers this expense, along with some other costs. But, those expenses slightly exceed your estimates. While you might be able to still enjoy a payoff at the end, it will be less or worse, could turn into a nightmare loss. This certainly isn’t the only misstep which plagues buyers. Here are five first-time rehab home buyers mistakes you need to know:
- Not conducting a home inspection. It really doesn’t matter what the apparent condition of the property is, or even if it’s being sold “as-is.” Never purchase any property, including new construction, without conducting a professional home inspection. It’s simply too much risk and not worth the small amount of savings.
- Underestimating rehabilitation costs. You’ve probably seen enough reality property flip television to know the cost is always higher because unforeseen circumstances strike. So, get at least three estimates from licensed, experienced contractors and then add a minimum of 15 percent.
- Underestimating the real time-frame. The time it takes to rehab a property not only includes the actual work, but also, time for material availability. You’ve got to factor into your timeframe enough waiting time for certain materials, appliances and fixtures.
- Failing to think long-term about resale. You’ll also need to look into the future as much as possible. While you don’t have a crystal ball, you can look back at the area’s market performance. Additionally, find out what’s on the horizon in the foreseeable future. After all, you don’t want to purchase a house with a great view only for it to be obstructed by a planned development.
- Over-customizing or over-building the house. Even if you plan to stay put for many years, never let the temptation of over-customizing or over-building take over. Eventually, the house will have to be placed on the market for sale and these two mistakes will cause undue stress.
If you are considering buying or selling a house in Orlando’s Hunter’s Creek, or another community, contact us for the latest market information. We are local and experienced in all facets of residential real estate, here to help you, when you need it.