If you've been dreaming of owning a home in San Diego, you have most likely realized it is a highly desirable area. In terms of supply and demand, San Diego is a seller's market.
There is more demand for homes than is available. Many sellers are finding that homebuyers are willing to enter bidding wars that push the sale price even higher.
So how can you buy a home in San Diego that doesn't break the bank? Home renovation may be a realistic option. Read our guide for valuable points to consider when deciding if a home that needs renovation is a smart choice.
Is a Home Remodel a Good Investment?
Buying a home may be the largest investment you make in your life.
Real estate continues to be a sound method for accumulating wealth. Your home purchase should be a living space that you enjoy and also an investment that brings a nice return should you choose to sell later.
When considering a home that will need remodeling, there are several factors that will determine if the cost of a renovation will be worth it.
Ask any real estate professional, and they will tell you location is the most important factor for determining your return on investment. This is an area where a local real estate agent can be helpful with data about current factors and future developments.
Quality schools, crime rates, work opportunities, and ease of commute all affect the cost of real estate. Are these factors that you consider valuable, too?
In a seller's market, you may not find an affordable home that meets all of your location requirements. Choose your two most important location needs, and focus your home search in neighborhoods that meet them.
Dollar for dollar, the square footage of a home determines the cost of a home renovation. It's basic math. More square footage means more materials for flooring, paint, siding, roofing, and the list goes on.
On the flip side, appliances and fixtures are costly regardless of square footage. For example, a standard tub and toilet cost the same whether you have a large or small bathroom. Keep this in mind for homes that need kitchen and bath remodeling.
Be realistic about the size you really need. Think in terms of now and the future. Is this your forever home or an investment you will resell in a few years?
Cosmetic renovations and updating for a house makeover are one thing, but structural problems can cost big bucks both now and later. If you find a home, make your bid contingent on a home inspection and warranty.
You can turn a neglected property into a thing of beauty. If the foundation is not secure, all of your money and efforts will be wasted if the home is sinking.
Yet, don't let minor structural problems scare you off from a great bargain.
Sections of foundation that need to be fixed because of wood rot or termites are totally doable. Be more concerned about the land beneath the home and its natural settling pattern.
If you are confident in your own construction skills, you can obviously save a lot of money in labor.
However, keep in mind that DIY projects can become very costly if done incorrectly. You will end up paying the cost of the original renovation and removal of mistakes.
Calculating Home Renovation Costs
When you bid on a home, you will need to factor in the total price you're willing to pay and the cost of renovations. Even if you do not plan to buy for another year, do your homework now.
Learn About Products
You may be amazed at the advancements being made in home improvement products that offer sustainability and energy efficiency. You may have traditional materials in mind and be unaware of products that can save you money upfront and over the long term.
Start making a list of features that are the most important to you. Can't stand carpet? Research the cost of different types of flooring.
Keep a file on appliances, HVAC equipment, windows, doors, and exterior finishes. Find what you like and their costs even if you are not sure if you will need them. You will be better equipped to create a budget for renovations if you have a general idea of the cost of most products needed for a remodel.
Start building a reference portfolio for local contractors. Get advice from family and friends for reputable companies. It's okay to talk to contractors before you have found a home to share your plans and ask about general costs for renovations.
Once you have found a home, your contractor portfolio will save you time on obtaining estimates to compare and scheduling phases of your home renovation.
Budget for Surprises
In any type of construction, there are always surprises. A wall that was planned for removal turns out to be a load-bearing wall. Old wiring is discovered and needs updating.
In addition to planned updates, talk to your contractor about the 2019 Building Energy Efficiency Standards that apply to new construction and additions or alterations to existing buildings.
Be prepared for unexpected costs by reserving 10-15% of your total home improvement budget for surprises.
Financing a Home Remodel
There are many ways to finance renovations. Homebuyers often purchase fixer-uppers that are safe but do not fit their style. They later use a home equity loan once they have paid enough on the mortgage to build equity.
Yet, did you know that there is special financing to help homebuyers in San Diego who renovate a home?
San Diego Home Renovation Loans combine the purchase price of a home and the cost of renovation into one loan. There are 4 types of home renovation loans to choose from.
Find a Bargain Home in San Diego for Home Renovation
We hope that you have found the tips in this home renovation article useful and are excited about the possibility of homeownership in San Diego.
Whether you are ready right now or doing a little homework to figure out your options, keep John and Melissa Steele in mind. Contact them at Steele San Diego Homes and view an introductory video to see if they may be the right fit for you.