First-time buyer overwhelmed by fixer-upper
Q: I was looking for a way to invest my money, so I bought a fixer-upper condo. Actually, I have no real estate experience, so I'm feeling somewhat overwhelmed. My plan was to hire someone to remodel the unit and then rent it out.
I got three bids from contractors to redo the walls, the electrical wiring and the bathroom and kitchen plumbing. Two of the bids were around $15,000, and one was $30,000. I have no construction experience and am wondering how to begin. What advice can you give me before I jump into this project?
A: A fixer-upper project can be a major undertaking if you have the skills to do the work yourself and a major expense if you have to hire others.
Either way, beware of making improvements that may not be necessary or profitable. For example, when you say “redo the walls,” what does that mean? The most work that walls are likely to need is patching and repainting, unless you plan to alter the floor plan. Changing the locations of walls can be costly and time consuming and may not increase the actual value of the property.
Patching and painting are routine procedures that are neither costly nor difficult. For this kind of improvement, you can hire a licensed painting contractor, rather than getting a bid from a general contractor. If you are moderately handy, you can save a bundle by painting it yourself.
When you speak of redoing the wiring, does this mean you intend to rewire the dwelling? If so, consider carefully before embarking on a major expense that may be totally unwarranted. Unless the condo was built in the 1940s or earlier, there should be no need to rewire the unit. If there are specific electrical repairs that need to be done, hire a licensed electrician. Just make sure that all of the outlets, lights and other fixtures are operational and that there are no safety violations. Have the breaker panels inspected to be sure everything is safe and legal. If, by chance, the unit has aluminum wiring, the wire ends may need to be retrofitted by an electrician who is experienced with this type of upgrade.
As for redoing the bathroom and kitchen plumbing, what kinds of upgrades do you have in mind? Unless the fixtures and piping need replacement, necessary repairs may not necessitate spending a fortune. Make a list of essential repairs and get bids from licensed plumbers.
As a general guideline for the project, major renovation of the condo makes sense if you plan to live there. If this is just an investment, all you should do is to make the place functional, presentable, and safe.
When handled properly, real estate is among the most profitable form of investment you can make. If possible, try to meet other people with fixer-upper experience and get some firsthand advice on your project. Your Realtor may know some investors who are experienced with fixer-uppers.
• Distributed by Action Coast Publishing. Questions to Barry Stone can be emailed to barry@housedetective.com.