If you watch home improvement shows, you know that “fixer-upper” houses come with surprises inside the walls—sometimes small, sometimes big.  So how do you prepare yourself to take the plunge?

Above all, keep your mind on the money.

Budgeting gets a little more complex with a fixer-upper. The good folks at This Old House offer this formula:

  • Add up all the costs to renovate the property based on a thorough assessment of its condition.
  • Then, subtract that amount from the home’s likely market value after all the work is done. You or a realtor will need to seek out prices of comparable properties in the neighborhood to calculate an appropriate number.
  • Then, deduct at least 5 to 10 percent for “surprises.” The number you end up with should be your offer.

Go in with your eyes wide open.

In Florida, you have a 10-day window after signing the purchase-and-sale agreement, during which you may decide to walk away from the sale, free and clear. Schedule a home inspection ASAP.

However, keep in mind that a home inspection only covers what the inspector can see and touch. The inspector will probe sills and beams for rot or insect damage, but can’t open a wall to see what might be inside.

So also bring along a trusted, experienced contractor whose “builder’s eye” (he can’t open walls, either) is more likely to spot problem areas. He can also give you an idea of how much repairs will cost.

How should you spend your renovation budget?

Put the “must do” projects at the top of your list.  Those include:

Structural repairs and upgrades. If you’re thinking about changes to the floorplan, this is also the time to execute.

Code upgrades.  Electrical, plumbing, water and sewer, plus any required storm proofing.

More storm protection. We’re calling this a “must do” because you want to guard your investment in the property.

Then, as your budget permits, it’s time to attack the home projects that give back the most. To recap:

  • Kitchens are #1 by a country mile.
  • Refresh the bathrooms.
  • Add or reconfigure living space.
  • Fresh paint—inside and out.
  • Landscaping, even if it’s just edging and plants that add color and definition to the front yard.

Fixer-uppers present financing challenges—and opportunities. Ask a Pen Air mortgage representative about home equity lines and loans, construction loans and other ways we can help you (with no surprises!). Learn more at www.penair.org/Mortgages