Fixer-Uppers and Conversions Questions Q. How do I know if a fixer upper property is a good investment?
A. Ascertaining whether the property you're interested in is a wise investment takes some work. There are a few things to consider before jumping into the world of fixer uppers. First, you need be aware of your personal skills. Do you have the ability to do a lot of the work yourself, or will you need to contract workers? This will eat at your potential profits. Second, figure what the average house in a given area sells for, as well as what the most desirable houses in that area are like and what they cost.
It is suggested that buyers who take this route try to find a "cosmetic fixer" that can be completely refurbished with paint, wallpaper, new floor and window coverings, landscaping and new appliances – things that the average person can do. You should avoid run-down houses that need major structural repairs unless you are an experienced investor. A house price that looks too good to be true probably is. A smart buyer will find out why before buying it.
Q. Where can I find fixer-uppers and distressed properties?
A. You can find distressed properties or fixer-uppers in most communities, even wealthier neighborhoods. A distressed property is one that has been poorly maintained and has a lower market value than other houses in the immediate area
The basic strategy for a fixer-upper is to find the least desirable house in the most desirable neighborhood, and then decide if the expenses needed to bring the value of that property up to its full potential market value are within one's rehab budget.
Q. What are some guidelines to follow when trying to find a contractor?
A. Never hire a construction professional without first checking him or her out first. Referrals are great, however ask for other references from the contractor so make sure you get an overall picture of this person in terms of cost, overall outcome, and timeline. You can also use the Better Business Bureau (www.bbb.com) to see if there are any complaints on file for a certain contractor or contracting company.
Ask what kind of worker's compensation insurance and liability policy they carry and get policy and insurance company phone numbers so you can verify the information. If they are not covered, you could be liable for any work-related injury incurred during the project.
If they pass the insurance hurdle, next check some of their references. A good contractor will be happy to provide as many as you want
Finally, don't let yourself be rushed into making a decision no matter how competitive the market may seem. Also, never pay a deposit to a contractor at the first meeting. You may end up losing your money.
Q. Are fixers a good idea in bad areas?
A. Distressed properties or fixer-uppers are everywhere, even in wealthier neighborhoods. Such properties are poorly maintained and have a lower market value than other houses in the neighborhood.
Many experts recommend that buyers find the least desirable house in the best neighborhood and then decide if the expenses needed to bring the value of that property up to its full potential market value are within one's budget. The goal is to make a profit from the investment and if the final product stands out too much from the other houses in the area, it might not sell. You want to make sure that if you are investing capital and time into a project, it will sell for more that what you put into it.
Q. How do I ensure the construction or renovation work being done on my home is according to code?
A. Speak to the building department of your municipality for any code-related questions. Each province is regulated by a provincial building code, based either in full or in part, on the model National Building Code, developed by the Canadian Codes Centre of the Institute for Research in Construction (part of the National Research Council). It is then the responsibility of the municipalities to ensure all new construction and major renovations such as additions and changes to structure adhere to the provincial code that applies.
Q. How can I find a list of contractors in my area?
A. The best source for finding a good contractor is often referrals from family, friends and neighbours who have done similar renovations. You can also get names from local homebuilder and renovator associations, and you can check with building supply stores, municipal building departments, Yellow Pages and the Internet.
Q. What are the average square foot costs of building a home?
A. The average cost of building a home can vary greatly depending on the style of house, materials used, level of finish and other factors. However, there are publications available on the topic which could be helpful to you. Please contact us for more information.
Q. I need do to some repairs on my house. Where can I obtain guidance?
A. The CMHC website has an abundance of information that can assist people in renovations and repairs. It includes, anything from renovating a kitchen to replacing a roof to fixing drafts or a damp basement. Read through the CMHC website to gather more information about the topic of your renovation needswww.cmhc.ca.