Buying a house is no easy feat if you are on a tight budget. It’s no surprise many frugal house shoppers opt for a fixer-upper over something more move-in ready. Here is mostly everything you need to know about buying a fixer-upper.
What Is A Fixer-Upper?
In real estate language, a fixer-upper is a property that will require repair (redecoration, reconstruction, or redesign), though it usually can be lived in or used as it is.
A fixer-upper is a house available at a lower purchase price because it requires major maintenance work. While you can likely still live in a fixer-upper, you’ll need to spend a lot of time and money on structural and/or cosmetic improvements.
Buying A Fixer-Upper House: Pros And Cons
A fixer-upper house comes with its own set of advantages and drawbacks. Familiarise yourself with them before buying a fixer-upper in need of serious TLC.
A lower purchase price: Although you’ll need to spend more on renovating it, a fixer-upper house will come with a lower list price and down payment requirement.
Less competition: Generally speaking, there is less competition for fixer-upper homes, so you’re more likely to land the home you’d like at a great price.
Chance to customize your home: Once you buy a fixer-upper house, you have the freedom to do whatever you’d like to it. Don’t like the kitchen? Remodel it. Wish there was a deck? Build one.
Quality control: When it comes to renovations, you’re in charge. You can choose the materials, colours, contractors and everything else.
Expensive renovations: Depending on the renovations, you may end up barely breaking even – or spending more money on a fixer-upper.
Difficult budgeting: While you can run the numbers and estimate how much your renovations will cost you, it’s almost impossible to come to an accurate figure. There will always be surprise costs that pop up.
Unexpected issues: Even if you get an inspection, there are almost always unexpected issues, especially if the house is older.
Long-term construction: Unless you live somewhere else while you’re renovating your fixer-upper, you’ll have to live in a construction zone for months or even years.
Should You Buy A Fixer-Upper?
Buying a fixer-upper house depends on your unique situation. A fixer-upper house may be a good option for one house shopper and a bad idea for another. Consider your budget, needs, preferences and lifestyle when you ask yourself this question.
Is A Fixer-Upper A Good Investment?
A fixer-upper may be a good investment. But it can also be a huge money pit if you estimate renovations incorrectly, contract out for most projects and skip important details.
To ensure a fixer-upper house is well worth the money, look at comparable homes (known in real estate as comps) in the neighbourhood. Then add your estimated cost of renovations to the purchase price. If you’re making money on the home, it’s probably a good investment.