Considering a Fixer-Upper? 15 Ways to Avoid a Money Pit

Fixer-uppers are back in style. Ask any fan of the HGTV show “Fixer Upper.

In the housing boom, few homebuyers wanted to bother with renovation projects. New homes and those in move-in condition were the ideal.

That’s still true for many buyers. Maybe most. But other homebuyers are finding that, done correctly, remodeling a fixer-upper can save lots of money. Fixers are getting attention because:

  • Home prices are high in many cities and a fixer-upper may be the only affordable choice, at least in neighborhoods you want.
  • Home decorating and improvement TV shows inspire many buyers to turn to remodeling to get the home that’s perfectly suited to them.
  • Lovers of period homes always want to lovingly restore old structures.

Fixers with true potential

The wrong remodeling project can become a money pit that strips your bank account right down to the studs.

In the video below, Money Talks News founder Stacy Johnson explains how to distinguish a smart purchase from a potential black hole. After watching, keep reading to learn more.

Here are 15 ways to identify the fixer-uppers worth your time and money:

1. Make cool calculations

Bring a cold analytical eye when shopping for a home to renovate. Put your emotions in the back seat while you assess each home’s possibilities.

2. Love the floor plan

Look for a floor plan you can live with. Moving load-bearing walls is an expensive proposition. SFGate tells how to identify load-bearing walls.

3. Start with the basement

Inspect a home thoroughly, inside and out. Check inside and outside the basement or foundation for exposed wires and pipes, cracks in the foundation or water pooling around the home.

“The biggest problems in a house typically arise as a result of poor stability in the structure or foundation,” contractor Tyson Kunz told Bankrate.

MSN Real Estate says:

Drainage and foundation repairs are thankless expenses that can run tens of thousands of dollars. To detect foundation trouble, tour the exterior, checking for cracks. If you can slide a quarter sideways into a crack, it’s too big.

Wise Bread says:

[A basement] can provide valuable clues on the quality of construction; condition of the HVAC, plumbing, and electrical systems; and how well previous owners have maintained the building. Avoid sagging floor joists or unstable supports, ancient heating and AC systems, leaking water heaters, and electrical panels with loose wires.

HouseLogic and About.com offer more details on inspecting basements.

4. Inspect the roof

Get a home inspector or trusted roofing specialist to tell you if the home needs a new roof, which costs $20,000 to $40,000 or up. “The investment won’t increase the home’s resale value or your pleasure,” says MSN Real Estate.

Consumer Reports, in an article on assessing fixer-uppers, says:

Runaway water can wreak havoc on any home and a leaky roof is its quickest way in. If the home has an asphalt roof, look for cracked, curled, and missing shingles. Gutters, downspouts, and leader pipes should also be in place to collect rainwater and channel it away from the house.

5. Scrutinize bathrooms

Bathrooms deserve special attention because leaks cause rot and structural damage.

“Sloppy showers lead to repeated occurrences of water on the floor that seep through into the floor of the bathroom and adjacent rooms,” says HowToManGuide.com.

6. Avoid ancient plumbing and wiring

Two signs of trouble are the presence of these elderly building materials:

  • Galvanized steel pipes. Sediment can build up in the pipes and they may leak and corrode.
  • Aluminum wiring. It’s a potential fire hazard.

Replacing a home’s plumbing and wiring are budget-killers involving thousands if not tens of thousands of dollars.

7. Back away from funky smells

If your nose wrinkles when you enter a home, that’s a sign of problems. A home that emits bad smells may have a dangerous gas leak, sewer or septic problems or mold, all of which require expensive remedies. Save your money for improvements you can enjoy.

Musty and dank smells come from mildew or mold and disqualify a home from consideration. Mold is not always visible; it may be inside walls. Don’t assume you won’t find mold in a dry, arid climate. It can be caused by condensation inside walls.

8. Watch for rot

Rotting wood is another red light. Here’s how to inspect for it, according to MSN Real Estate:

Gently poke trim and wood surrounding windows and gutters with a pencil tip to spot soft, spongy or crumbly wood. Not only is replacing trim an expensive headache, but visible rot may just be the tip of the iceberg.

9. Inspect drywall and floors

Keep an eye out for stained, uneven or warped, discolored, peeling or damaged flooring or drywall. These can indicate rot or mold.

10. Run from bad siding

Deteriorating siding raises a red flag for two reasons:

  • It’s expensive. Depending on the material you choose, new siding starts at $10,000 to $13,000. Costs increase with the size and complexity of the job.
  • It indicates other problems. Siding may be rotting, blistering or disintegrating because of rot or mold hiding behind the home’s exterior.

11. Beware leaky windows

If you want to replace old windows with new, energy-efficient ones and it’s a priority in your budget, that’s cool. But be careful of committing to a home with leaking windows. Water seeping into a home through window leaks can cause untold — and unseen — problems from rot and mold. You can’t tell how bad the problems are without removing the windows.

12. Spot a bad location

Become an expert on the neighborhood. Bargain homes are often in less desirable areas. Knock on doors on the street and chat with neighbors about crime. Your job is to assess how bad a neighborhood is and whether it’s really going to turn around.

Even if you don’t have children in school, your home’s next buyer may, so learn about the quality of local schools. Get neighborhood crime statistics from the city police. Assess the home’s proximity to jobs, stores, banks, cafes, restaurants and playgrounds.

13. Look for pests

You’ll need an expert to tell for sure if a pest infestation is present. But you can spot some telltale signs, including: insect wings left on sills (termites); teeny sawdust piles along baseboards (carpenter ants); and urine stains, odors, or scrabbling sounds (rodents). The legal experts at Nolo.com describe tip-offs to other pests.

14. Hire a home inspector

Once you’ve found a home that passes muster with you, hire a well-regarded home inspector to professionally look at the structure from top to bottom. (Cost: $300 to $500, on average, according to FoxBusiness.) Don’t buy a home without a professional inspection.

MSN Real Estate tells how to find a home inspector. You can locate inspectors in your area on the websites of these national home inspector organizations:

Tag along as the inspector tours the home if you can. You’ll learn lots by seeing it through the inspector’s eyes.

Note: Don’t try to search for lead paint and asbestos. These are dangerous substances, so let the inspector do it.

15. Inspect after a rain

See if you can schedule your home inspection right after it rains. Visiting then lets you and the inspector see if water accumulates around the foundation — a bad sign, as it can cause leaks and foundation problems.

Have you bought a fixer-upper? Tell us about it in the comments below or on our Facebook page.

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  • Rod

    After omitting all of the potential problems listed here, there isn’t much room left other than buying a new home.
    We bought a house with a barn on 5 acres 30+ years ago for less than $35,000. We’ve poured money into it ever since, but we now have the home that we dreamed of. The house needed major work, most of which I was able to do myself. I hired help to help me insulate, new siding, new windows, new roof, new chimney, etc. The barn had to be torn down, but after the kids had so much fun in it. In the hayloft they had a pool table, TV, davenport, and basketball court with sodium lights from when the town upgraded. So, if you’ve got the “stuff” to do it yourself, you can, just know what you are getting into. Our home was assessed to be worth $250K and I know we probably stuck about $125K into it which includes a sunroom addition and a 2 1/2

    car garage. It was a great learning experience and I find things that I’d have done differently.