Apr 18 2008
5 things to consider when negotiating a purchase – Deferred maintenance
Deferred maintenance
You may be able to buy a fixer under market value and in a few months have an upgraded property. However, if you have not managed a major remodel AND have reliable contractors, be careful. Deferred maintenance homes may have unanticipated hidden problems. If you don’t have a budget to address them you may quickly lose this investment game and get stuck with an unfinished project you can’t afford.
House flipping is interesting to watch on TV, but there are many unseen pitfalls. Have a plan and research it before you get into contract. Seek advice from a real estate agent and contractor so you get a good estimate of what you will spend out of pocket and if the end result will be worthwhile. Always budget for unexpected expenses. And, remember, time is money.
Buying an older home that is habitable and functional that you plan to live in for three to five years is often the safest investment. You can update the home and follow an annual budget, take the tax deductions for an owner-occupied property, and build equity through improvements and appreciation.
