Fixer-upper houses are a gamble; it could turn out to be your biggest regret or be the equivalent of winning the lottery. If you have considered investing your money in a fixer-upper, you have probably done some research or found inspiration elsewhere. A relative, a friend, or a colleague, may have bought an old house that was transformed into their dream home. Most fixer-uppers have potential, but they are not always worth the time and money required to restore or refurbish them.
It is recommended to weigh the pros and cons first so that you make an informed decision:
Pro: Lower Initial Costs
The primary reason for choosing a fixer-upper is the low price, as compared to newly built turnkey homes. Most fixer-uppers are 10-20% cheaper than a brand-new house of identical capacity in the same neighborhood. If a turnkey home is out of your range or you are willing to settle for something somewhat shabby to save a significant amount of money, a fixer-upper should be right up your alley.
Con: Not move-in ready
Fixer-upper houses are not suitable for anyone looking to move in immediately. Fixing, renovating, and/or remodeling a worn-out building calls for ample time and forbearance. You shall start by figuring out what work needs to be done and then hire a contractor to make the place habitable.
Pro: Opportunity to move into a popular neighborhood
Most fixer-upper homes are located in distinguished neighborhoods that are well-populated and high in demand. Many people want to settle in a true and tried area, but newly built houses in such vicinities are scarce. If a fixer-upper comes up, you may consider yourself lucky to have found a place in an already thriving locality. These kinds of neighborhoods have plentiful opportunities for employment, a low crime rate, and access to all the best facilities.
Con: Requires extensive Renovation
Most fixer-uppers need much more than cosmetic repairs. You could be looking at multiple structural defects that are quite expensive to patch up. Your budget to renew the house might not be enough to cover all the costs. Many people take on a fixer-upper project, but then have to abandon it halfway because they ran out of capital. The renovations might even inflict a bad debt situation; hence, it makes sense to overestimate the total expenditure at the starting point.
Pro: Highly Customizable
Working with a fixer-upper allows you to modify and update the house to your liking. Given that a lot of stuff is either damaged or in poor shape, there’s so much you can replace and improve. There is no obligation to restore the place to its former glory. You can convert the obsolete design fixer-upper into a contemporary and stylish abode with some planning and creativity.
Con: Additional issues with the house may be discovered at a later stage
Many flaws in fixer-uppers are not noticeable right away. Several problems are discovered after the renovations begin. For example, removing a floorboard might reveal bug infestation, or tearing apart a wall may expose rotting beams and pipes. The surprise costs can add up quickly and surpass your maximum budget for the renovation.
Pro: The property can be sold at a profit after fixing
The greatest outcome of renovating a fixer-upper is that its market value increases significantly. If you buy and sell real estate for the purpose of business, investing in fixer-uppers could be a lucrative venture. You can purchase worn-out houses for cheap, give them a facelift, and then resale at an excellent profit.
Con: You may end up spending more than the price of a turnkey home
The idea of buying a fixer-upper to save money may backfire. Sometimes, giving new life to a rundown house turns into an outrageously expensive pursuit. The lower initial cost might not even come close to compensating for how much you spend on making the fixer-upper livable again. Under these circumstances, a turnkey home turns out to be the more affordable option.
Pro: Less Competition
Fixer-uppers do not usually appeal to a mass audience because the majority of buyers prefer houses that are modern, pristine, and aesthetically pleasing. They don’t have the time or patience for something that needs too much thought and work. If you have your eye on a particular fixer-upper house, getting your hands on it shouldn’t be that hard. However, make sure that this property is not subject to liens, foreclosure, or some other legal dispute. Work with an experienced real estate attorney in the area to guarantee a safe and secure transaction.