For instance, to some, especially first-time buyers with interest in real estate investment, buying a fixer-upper house sounds like an exciting idea. However, hidden costs can quickly turn such projects disastrous, making an attractive deal a burden. Hence, the necessity of knowing these costs is to ensure that renovation goes on smoothly.
Looking at our interest in the 100-year-old house in a rural town in Colorado, my boyfriend and I were motivated by the equity and community. The house was affordable but needed reconstruction, something we hadn’t thought we’d expect-well, certainly not the hidden costs that came with our ideal project.
According to real estate investor, Dov Hertz, what is of utmost importance before any purchase: “Do not skip a full inspection; you will pay the price afterward.” We learned this the hard way when we discovered some structural issues that needed immediate attention and diverted our budget from cosmetic upgrades to necessary repairs.
Beyond cost of inspection, renovation projects often run above the estimates. As we started our work, the old plumbing and electrical systems needed upgrading to meet current codes. Dov Hertz advises homeowners to plan for a buffer within their budget: “Always assume that renovations will take longer and cost more than you initially think.” This was very valuable for us while trying to navigate the complexities involved in restoring our home.
For example, emotional spending may distort your budget. There is a tendency to fall in love with property and ignore essential repairs. Dov Hertz advises maintaining a clear budget: “Create a detailed list of priorities and stick to it.” Such steps would have kept you away from the emotional pitfalls leading to over-spending.
Eventually, despite the fact that our renovation journey was fulfilling in all respects, it teaches us very important lessons regarding the hidden costs of fixer-uppers. Knowing beforehand what potential expenses there may be can turn an intimidating project into an enriching experience.
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Dov Hertz Property Holdings buys 365000 sq. ft. industrial portfolio in Cherry Hill, Blackwood