While we're on the topic of older homes, let's talk about the financial advisability of buying what's commonly called a 'handyman's special.' Many find it difficult to resist the urge to buy a run-down bargain and fix it up. Before you do so, make sure you've tallied up the numbers and they add up. You'll need to know exactly what needs repairing and fixing up. Make sure you have put together an accurate list. After you put a dollar value on it, and add that to the original purchase price of the home, see if it still makes sense to go through with it. Don't forget to add in the value of your own sweat and toil. You may not want to, or may not know how to put a value on it, but when you're spending endless amounts of free time doing home repair, you will realize just how valuable your time really is.
Some Examples of Costly Repairs
In deciding whether to buy a "handyman's special," here's a list of some of the more costly or complex repairs that should generally be avoided in most circumstances:
SUGGESTION: While money spent on remodeling your personal residence is not tax-deductible, keep accurate records and receipts. Money spent to improve your home adds to your home's tax basis.
Bringing the home up-to-date can make financial sense for some remodeling projects. Re-doing your kitchen and bathroom usually bring the greatest return on your investment (the cost of the improvement). Unless you plan on living there for a while and enjoying your handiwork yourself, steer clear of exotic remodeling like sunrooms. These add the least to the resale value of your home in relation to the costs involved in undertaking the project.
IMPORTANT NOTE: When beginning your remodeling project, don't let your projects get out of hand. Improving your home to a value far above those in your neighborhood makes no financial sense, since the resale value of your home will be impacted by the overall value of your neighborhood.