Renovating or updating a house may not be as simple as it appears on tv. Let’s look at the PROS and CONS of buying a Fixer Upper home versus a home that is Move-In Ready, to help you narrow options for the type of home that you would like to purchase.
Let’s start by looking at the upsides to buying a Fixer Upper:
Pro #1: Location
There are some streets and neighborhoods that are very desirable but don’t have a high turnover. If you want to get into this area, you may have to consider purchasing a home that might need some updates in order to meet all of your needs.
Pro #2: Features
When purchasing a move-in ready home, there will most likely be some features that you will still want to change, from flooring to paint colors to kitchen cabinets. When you buy a fixer upper, you are not paying for other people’s design choices and updates, you get to pick out the finishes that you would prefer.
Pro #3: Price
If you are a savvy buyer, and you know the price comps for an area, you will know when you are getting a great deal on a home. Most often homes that need work are valued lower. A rule of thumb, if you want to ensure that you are making a wise long term investment, don’t buy the most expensive house on the street as a fixer upper. You will also want to talk to your bank or mortgage broker about what options that you may have with regards to a “Mortgage Plus Improvements”. This will be an important factor when you are looking at your total budget.
Now let’s consider the downsidesto buying a Fixer Upper:
Con #1: Time
Depending on the scope of work, renovations may take a few weeks or they could last for months. If you only plan on changing cosmetic items the turn around would be a lot quicker than if you plan on changing layouts or making large updates to electrical or plumbing. Especially when permits are involved. Living in a renovation zone could slow down progress or not even be possible, so you may also need to factor short-term alternate living arrangements into your purchasing decision.
Con #2: Creating an Accurate Budget
Before committing to a fixer upper you should get quotes on the materials and labor required to complete the renovation projects. If you have the skillset to tackle a fixer upper yourself, that’s great, but most people will have to outsource at least part of the work to the professionals. You may choose to hire a general contractor to manage the full project or you can hire each trade individually. Do your homework and be realistic about what you want to see in your house and how much is it going to cost to make that happen. Don’t be disappointed when you find out it costs twice as much to make your dream kitchen a reality.
Con #3: Unexpected Expenses
When you start pulling down walls, you really don’t know what you are going to find, especially in older homes. Even though you may have budgeted for unexpected expenses, there can still be something that comes up that blows your budget out of the water. Ultimately, the biggest risk of a fixer upper is you may end up spending more money and a lot more time on a house than you would have buying something that was move-in ready from the beginning.
Now that you know some of the pros and cons of buying a fixer upper versus a move-in ready home, take a step back and ask yourself if a fixer upper is the right fit for you?