This is a problem that most people have when they have decided to buy a home. It doesn’t matter if it is your first home or your tenth; there is a simple process to figuring out the cost.
First things first, when looking to buy a house that is not brand new you must understand that there is no warranty on the home. When you buy that home you own the home and all the things that could go with the home. If something breaks in the home while you own it you don’t get to go back to the people you bought it from and say “the stove in the kitchen broke and I only owned the house for a week, I think you should buy me a new one!”
There is basically no guarantee on anything in the home; you will need to make certain assumptions when you are going to buy it.
The general rule of thumb is that you should be renovating your home every 12 to 15 years. That might sound like a contractor trying to get you to spend money on renovations but if you think about it things start to wear out in a home after 10 to 12 years. Whether its tubs, toilets or the finish on hardwood floors with use and abuse things get damaged and warn out. Style’s and trends change in homes faster than 10 to 12 years.
Since the average homeowner only owns their home for 7 years before they sell it and move on your going to want to renovate to maximize the re-sale value of your home.
With that in mind you should walk through a potential house and take notes on everything you see.
You will want to make a list, your list is quite simple, and you should break it down into 3 categories.
The first category is the things that have to be done right away or within the first year that you are going to live there, these things include; Painting, immediate repairs, changing a furnace and anything that you will need to do to live in the house before your furniture is brought in.
The second category; are things that you need to do in the first 5 years of living in the home. These are things like bathroom renovations, re-shingling an aging roof or updating the appliances in the home.
The third category; are things that you would like to do in the next ten years, basically anything you want to do to the house before you re-sell it.
The first two categories are the easiest to price, get in touch with a contractor and talk to them about what you want to do to the house immediately and in the next 5 years. They should be able to give you a ballpark figure on what a lot of those things would cost. Obviously there are some things that you can do yourself like painting, but fixing roofs or waterproofing in the basement should be done by a professional.
The third category is harder because these things are so far down the road you never count on the costs staying the same. This category you will just have to make an educated guess on, make the guess to the nearest $10,000. The third category is a guide line of what you think can do to the house and if you can afford it.
Looking at your three categories the first and maybe the second you might want to include into the price of the home so that you have the option to add it to your mortgage. The third category is so far down the road that your financial situation might be completely different at that point.
Now that you know the cost of things that need to be done to the house add that cost to your proposed mortgage payment and decide if you can afford it. The worst thing people can do is buy a house that needs so much work that they can’t afford to do the work and are forced to live in a broken house. It gets worse for them when they go to sell it, something that needed to be fixed or replaced only looks worse with time and use. The value of the home decreases significantly as time passes.
When you are looking to buy that home, plan to make a list if you fail to plan then you might as well plan to fail.
Village Builders Inc.