This post brought to you by BMO Harris Bank N.A. Member FDIC. All opinions are 100% mine.
Psst: I was asked to write sponsored posts connected to the BMO Harris Bank Scavenger Hunt Sweepstakes. I’ll be writing a post each week for five weeks about my own experiences with finances around specific life stages. (For more, check out my first two posts about saving with a baby and saving with a new job.)
Buying a (fixer-upper) home
If there’s one thing we’re pretty familiar with at NewlyWoodwards, it’s buying a home. We’ve done it five times since 2007, so I’m considering ourselves at least somewhat knowledgable about the process.
That doesn’t mean we LIKE the process. It’s terrible, tedious, stressful, time-consuming and just horrible overall, in my opinion.
But buying a house is worth all the bad parts. Why? Because there’s nothing like the feeling of getting those keys. Your keys. To an entire house that is all yours. It’s just an amazing feeling.
But when we signed our lives away on our first home in 2007, we were not knowledgable at all. And there’s something about buying something so expensive that made us a little overwhelmed and scared.
Did you know that we put an offer on our first house before Ryan had seen the inside? He was working so I went to see it without him. It smelled horrible. It needed completely redone. Did I mention that it smelled horrible? Oh my goodness, it smelled so bad.
In other words, it was perfect.
We had been on the hunt for a fixer-upper and this was the ugliest house in a great neighborhood. We had actually lost a few houses in our hunt and I wanted this house. Once I shared the details with Ryan, he was all in. We made an offer and the rest is history.
I don’t recommend doing this, by the way. But it did work for us.
We knew that we would be bleeding money on this house for nearly a year while we renovated. So we bought a bank-foreclosed property that was way under the market value of homes in the neighborhood. And we paid cash for every single thing we did on that house over the next year. (We also did the same thing for our three rental properties and our second home.)
Here are a few things we learned about saving money when buying your first (fixer-upper) home.
Have a plan. When we buy a home, we have a pretty good idea of what it’s going to cost to renovate. We write down a massive list of everything we think will need done and then we add about 20 percent because everything is going to go over budget. That gives us a starter plan for the renovation.
If you don’t know what things cost, you can figure it out by contacting a local contractor or searching costs online. Or go to your local home improvement store and make friends. In my opinion, you should never buy a house before knowing exactly what it’s going to cost to make you happy to live there.
Prioritize. The houses we’ve bought were not liveable, but most people aren’t so crazy. Ask yourself what MUST be done before you move in? What would be NICE to be done before you move in? What can you WAIT to save for?
In my opinion, running water and electricity is a MUST. 😉 We have found that painting and flooring are something that are much easier to do before moving in. Not a MUST, but a NICE. So, we typically do those before moving.
There are also projects that are a NOT or a WAIT. Sometimes, things just don’t fit into the budget. We moved into our first house before the upstairs had even been touched. We lived on the main floor for eight months while we worked on the upstairs and saved. In our current home, we planned to add a half-bath on the main floor but that never came to fruition because of budget.
Be reasonable. It’s really, really easy to get emotional about your home. You will want to recreate the cover of House Beautiful. I get it, you want everything to be perfect. But think about what actually matters to you and what is really noticeable.
Light fixtures and high-end anything (read: appliances, finishes, hardware) do not matter to me. But floors are something that matter to me. So, I may spend a little more on flooring and go with budget in other areas (like appliances and countertops). And you know what, I never notice those reasonable compromises. And you won’t either if you are honest about what really matters to you. (And, by God, if you are like the people on House Hunters who insist that THEY MUST HAVE GRANITE, I may have to smack you.)
About the BMO Harris Bank Scavenger Hunt Sweepstakes
The BMO Harris Bank Scavenger Hunt Sweepstakes is a five-week long interactive game experience. The game takes you through a town-like environment, highlighting key milestones in the journey of life. This week, you can explore your fancy new virtual home (with a pool, no less). Here’s what it looks like:
By participating this week (through March 10 at 11:59:59), you can also collect tokens for a chance to win $950. (Winner will be drawn on March 13.) Find more finance tips when buying a home on Facebook
What’s your biggest piece of advice for someone buying a first home?