If the hidden costs of a fixer-upper stay hidden, they can add up and eventually overwhelm you. Luckily, there are two key things you can do to prevent this from happening.
If you’re buying a fixer-upper, there will usually be hidden costs involved. A lot of people tend to forget about these costs, however, which is unfortunate because they can add up over time and become overwhelming.
Some examples of these hidden costs include:
- Carrying cost, or how much it will cost you to hold the property.
- The total cost of your principal, interest, taxes, and insurance.
- Lawn maintenance.
- Weather variables. If you’re in an area where it snows, you’ll need to pay to remove it.
Getting an inspection will both identify hidden costs and give you peace of mind.
It’s important to have a slush fund ready and waiting to cover hidden expenses. No matter how much you plan out your budget for a fixer-upper, you still want to have a slush fund that’s at least 10% of what you think your repair costs are going to be. If you plan to spend $25,000 on your fixer-upper, for example, you’ll want to have a slush fund of at least $2,500.
The number one way avoid the hidden costs of a fixer-upper, though, is to get an inspection. It costs less than $500 and will give you a good overview of everything that’s wrong with the house. It especially helps in focusing in on things like how the house is wired electrically, how the plumbing is installed, and whether those things need to be fixed or replaced. If it’s your first fixer-upper or you don’t have any previous experience in construction, getting an inspection will go a long way in giving you peace of mind.
If you have any questions or any additional ideas for us to discuss, just give us a call or send us an email. We look forward to hearing from you!
