Guide to Buying Cheap Homes in Nova Scotia

buying cheap houses

Buying a fixer-upper is like embarking on a thrilling adventure, but like any great quest, it comes with its fair share of challenges and hidden traps. So, grab your magnifying glass and hard hat because in this article, we’re delving into the nitty-gritty of what to watch out for when diving into the world of fixer-uppers.

The Canadian's Guide to Buying a Fixer-Upper

Ah, the allure of the fixer-upper. With sky high home prices, more and more homebuyers are looking at fixer uppers as a way to enter the homeowners market. The bargain price, a chance to build sweat equity, and an opportunity to create your dream home from a diamond in the rough.

But before you get swept up in the fantasy, buying a fixer upper is not for the faint of heart.  There are some harsh realities to consider when taking on a renovation project in Canada.

fixer upper

Inspection Essentials

The very first commandment? Thou shalt not skip the home inspection. I cannot stress this enough. Getting multiple referrals for who is the best inspectors in your area to do a thorough examination from top to bottom. We’re talking, checking for foundation cracks, rot in floor joists, sills or attic can mean structure being unstable. Signs of water staining, mold or condensation allude to drainage or moisture issues. Outdated or poorly maintained electrical/plumbing/heating can be signs of homeowner neglect and improper fixes. 

A proper inspection will reveal if that low price tag is just the tip of a very expensive iceberg of repairs needed. Failing to hire a qualified home inspector to thoroughly examine the property can lead to overlooking major issues like foundation problems, outdated systems, or structural defects that could be very costly to repair. Link to MoveNovaScotia.com Resource Page and local house inspectors.

Climate Impact

In Canada’s harsh climate, things like moisture issues, poor insulation and aging roofs can be costly headaches. Overlooked maintenance needs in older, inexpensive homes may include outdated electrical or plumbing and heating systems.Getting an accurate picture upfront is crucial.

A good inspector will take approximately 1.5 to 2.5 hrs depending on the size of the property. They will inspect everything from attic to foundation. Good inspectors will also not pass or fail an inspection as it is up to the buyer what they are willing to take on or what are deal breakers. 

house plans

Budgeting Realities

Cheap homes often need significant updates or repairs. Not budgeting accurately for the full extent of renovations needed can quickly make a “bargain” home much more expensive than anticipated.

Speaking of costly, let’s get real about budgets. As a general rule of thumb, budget at least 10% of the home’s purchase price for major renovations, plus 2-5% annually for ongoing maintenance and repairs once work is complete.[4]

But it’s wise to overestimate and have a solid 15-20% contingency fund. Renovation costs in Canada can quickly escalate due to factors like:

– Home age and extent of work required

– Permits and code compliance 

– Regional labour and material costs

– Harsh climate needs like enhanced insulation

– Potential issues discovered during renovations

The Details are in the Quotes

Getting detailed quotes from multiple contractors is a must. Don’t forget to also budget for temporary housing, storage costs, utility overages and other carrying costs during the renovation period. 

The more work you do yourselves the more you will save. But it can be costly if you attempt things that end up taking longer than a professional or that end up needing to be redone.

Taking on jobs like demolition and debris removal can really cut back on labour costs that you would be paying your contractor to do. 

Hanging drywall may look easy on HGTV but, trying to apply mud to badly hung sheets or even applying mud and not having to sand multiple times, can just end up looking like a badly done job, all the way around. 

Financing Your Vision

Unless you have a huge renovation budget, you’ll likely need to explore financing options. For smaller cosmetic updates under $40,000, you may be able to do a basic mortgage refinance if you have sufficient home equity.[2]

For larger projects, look into a Purchase Plus Improvements mortgage, which wraps renovation costs into your loan amount. Lenders will want to see quotes and it is usually only up to 10% of the purchase price.  

Specialized construction loans have stricter requirements, though. Be prepared for the lender’s inspectors and contractors to scrutinize your renovation plans and budget.

The more comprehensive your documentation, the smoother the approval process. Federal and provincial governments have loans for retrofitting and making a home more energy efficient, which may coincide with your renovation plans. Link for Secondary or Backyard Suite Incentive program here

Maximizing Your Investment

The last two quarters of 2023 still saw increases to construction costs, but the rate at which the increases were increasing was slowing. and in fact was the lowest increase in a quarter since the second quarter of 2020. Residential construction costs for Halifax were up 8.2% on an annual average in 2023. [6] 

Not all renovations provide equal returns. Prioritize updates that address structural deficiencies, replace aged systems like electrical/plumbing, improve energy efficiency (new insulation, windows, etc.), and enhance curb appeal.

In Canada, interior projects that tend to recoup significant costs include:

– Kitchen remodels (72% ROI for minor, 53% for upscale)[4]

– Bathroom remodels/additions (60% ROI for midrange bath addition)[4]

– Open concept main floor renovations

– Finished basements. 

Top ROI

The best return on investment for recent years has been replacing your garage doors, which provided a 101-103% return. Another tidbit is that homes with black doors sold more often than any other colour. Video for Top5 ROI for Resale

Cosmetic updates like new floors, paint and fixtures are icing on the cake. But avoid over-improving for your specific neighborhood, as that investment may never be fully recouped.

Best practice is to talk with local REALTOR® to give you a range of comparable solds prices, so that you don’t overinvest invest for the local market.

garage door

Keep Resale Value Top of Mind.

It’s a skill to be able to see a run down, dated property and its potential. Whether or not you are planning to live in this property yourself or going to resell it right away, the best way to protect your investment is to renovate with resale value in mind. 

 Buying a cheap home impulsively out of desperation or frustration rather than finding one that truly suits your needs can lead to regret later.

You may have a vision of making it your dream property and think you are going to live there forever so you are going to renovate it how you want.

Forever is a long time and a lot can happen between now and then, so it’s always a good idea to not go too wild with your renos so that you don’t appeal to any buyers should your situation change. 

Ask a Professional

Keep in mind a low priced home could be priced that way due to the home being in an undesirable area with high crime rates, poor school districts, noise pollution, or other neighborhood problems that can negatively impact livability and resale value. 

While cheap to buy, some homes may be virtually impossible to sell later due to inherent issues like an odd layout, low-quality construction, or other detractors. Seeking the expert advice of a local REALTOR® can let you know what buyers are willing to pay in any particular neighbourhood. Link to Home Buying in Nova Scotia

The Bottom Line

At the end of the day, a fixer-upper can be an immensely rewarding project…or a total nightmare. Going in with open eyes is key. Carefully inspect every nook and cranny. Develop a comprehensive, realistic renovation budget with plenty of contingency room. Secure appropriate financing.

Prioritize renovations that address necessities first and maximize ROI. And perhaps most importantly, be prepared for the process to take longer and cost more than expected.

With planning, flexibility, and a level head, that diamond in the rough can truly shine. But go in with blinders on, and you might just catch something much worse than renovation fever! Let this be your guide to a successful Canadian fixer-upper.

home reno pro

So, you have decided to buy a cheap house that you can transform in to a gem, but not sure which homes would have that kind of potential? Great news! I am here to help.

Dawn Magee on beach

I am Dawn, and I am so excited for you!

With 20 years of experience as a realtor in Nova Scotia, I can spot a fixer-upper with great potential from a mile away. I’ll guide you through the process, ensuring you find a budget-friendly home that’s perfect for your renovation dreams. Let’s turn your vision into reality and secure a future filled with the charm of a beautifully transformed home.

Want to hear how I can help you change your life? 

Benefits you can expect

Local resource

I'll help you learn about Nova Scotia's diverse regions, and factors to consider such as zoning, soil and services.

Communication Skills

I explain and guide you through the real estate process so you are able to make the best informed decisions for you.

Negotiation Skills

My extensive experience will help to you achieve favorable deals, saving you money and reducing stress.

How it Works!

01.

Let's Chat

We can schedule a phone call, Face time, Zoom Call or meet in person to clarify your wants and needs of you next move. Once you decide to hire me, we will sign a Buyers Agreement,  so that I can get to work! 

02.

Let's View

Once we narrow down our search to ones with the most potential, we will go view. This could take weeks or months before we find the right fit. Once we view some you may even change your preferences based on what we have seen. 

03.

Let's Offer

I will assist in writing, negotiating, and getting your offer accepted; then guide you through getting your conditions met to your satisfaction. From this point on, I will keep you on track for a smooth closing. 

Questions about your Next Step?

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