THE BEST HOUSE TO BUY AND RENOVATE

When you buy a house to renovate, you open many possibilities to save money and create value. Houses that need renovations often sell for less because most buyers don't want the trouble. Such a house can get you into a neighborhood or get you a large lot and house that you might not otherwise be able to afford. The trick is to estimate the cost of renovations and add them to the purchase price. The total should be in line with the value of the house after renovations.

If you are among the brave and hardy souls who will buy a house to renovate, you can enjoy a more profitable (and less stressful) experience if you look for the right kind of house. Basically there are three main groups of renovations. The best one for you will depend upon your needs, goals, and skills.

The groups are as follows:

• Cosmetic

  This is the best house for every renovator and especially for inexperienced renovators. It is structurally good and problem-free; it's just tired-looking or dirty. It sells for less than similar but well-decorated houses because most buyers can't see the potential of a coat of paint. Also, most buyers want something that is in move-in condition. The only drawback of this house is that it's hard to find. Many vendors and agents will try to get top dollar by pushing the house's "potential". This is especially the case in a hot real estate market when people will buy any piece of junk. Take your time and look for the right opportunity. Find a house that is in good condition but is so dirty or badly decorated that nobody else wants it. Then buy it for as little as you can. The renovation need only consist of cleaning, painting, replacing floor coverings, and other cosmetic things. You'll save the most money if you do the work yourself. Most cosmetic work is easy for even the least experienced do-it-yourselfer.

• Restoration

  This house has some problems due to age or neglect. It's services (electrical, plumbing) might need to be upgraded and its structure might need repair. Depending on its condition, this house can be a good opportunity for a more experienced renovator or someone who can get experienced help. The best candidates for restoration are houses that were once above average. Many older houses have marvelous woodwork and character that simply isn't found in newer buildings. Once restored, they become special homes that appreciate in value more than a comparatively ordinary house. Also, older houses tend to be located in more established neighborhoods that you might not otherwise be able to afford. The best restorations are carefully done to preserve the look of the original. This means matching materials and style to bring out the house's best original features and updating others. Be careful of houses that need too many repairs or are too deteriorated. These are the proverbial "money pits" that will make your restoration a costly nightmare.

• Alteration

  This house calls for a renovator's "eye" and imagination to see the potential for improvement. It can need repairs (within reason) but should be structurally sound enough to withstand alterations. It has features or characteristics that make it unsuitable or undesirable. Perhaps it has only two bedrooms or the bathroom is very small and dark. Because of this, it sells for less than the neighborhood average. The alteration presents the clever renovator with many opportunities. For example, the house needs a new roof but you want to add a second story anyway. You can use the roof to negotiate a lower price and put the saved money toward the renovation. The drawbacks of an alteration are, of course, the disruption and uncertain cost. Extensive renovations call for professional (read expensive) help. While work is in progress, it might be difficult or even impossible to live in the house. Also, some defects (like a cracked foundation or rotten joists) might only turn up as work proceeds, thus increasing the cost. Expect the worst and add it to the price you'll pay for the house. The total should be in line with the value of the house after renovations. Before you buy an alteration, check building codes to ensure that your planned changes are permitted. Keep additions true to the original part of the house.