Is Buying A Fixer-Upper The Right Move?

The pros and cons of getting a fixer-upper instead of a move-in-ready home.

Posted: February 22, 2023 by Coldwell Banker

You may be in the market for a house and are considering purchasing a fixer-upper.  Before making that big decision, know the pros and cons of getting a fixer-upper instead of a move-in-ready home.  There are a few significant points to consider, and it isn’t simply replacing a decades-old kitchen sink.

Depending on your current needs, decide to invest in a fixer-upper or a turnkey home.  Know the available funds you can work with, including the types of home loans you can get approved for.  Also, consider who will live in the home and if ongoing renovations will negatively affect the quality of life.

Read on to know the pros and cons of purchasing a fixer-upper compared to a new, turnkey home.

Pros of Buying a Fixer-Upper

1) Reduced Purchase Price

Fixer-uppers are priced way below market value since these properties always need extensive repairs.  This lower price is a true advantage when you don’t have a lot of funds to put into a downpayment.  This means immediate savings of tens, even hundreds of thousands of dollars on a home purchase.

Keep in mind that while your initial capital outlay is lower, there will be renovation costs to cover later on.  However, you can take on the renovations in your own time and in line with funds already on hand.  You’ve made the initial purchase; now, all you need is time to renovate.

2) Reduced Property Taxes

Along with a lower purchase price, your property taxes will also be on the lower side. Property taxes depend on the purchase price of your home; hence this translates to a double win for you. Aside from reduced taxes, you may even qualify for tax credits if you make energy-efficient upgrades while renovating.

Before undertaking the renovations, research what upgrades equal tax benefits in your particular city and state. These could be anything from installing solar panels to improved heating and plumbing systems that lower energy usage. Wind turbines, environmentally friendly insulations, and even skylights and windows can all be potential home improvement tax credits.

3) Create Your Own Customizations

One huge advantage to a fixer-upper compared to a turnkey home is you can customize it to your own taste.  Not only will you be able to choose the finishes, but you can also break down walls as you, please. In other words, you are not bound to a ready-made home that does not align with your style.

Everyone’s aesthetic is different, and unleashing your creativity in your own home is a joy not granted to everyone.  The mere look of a backsplash not chosen by you may have you cringing every time you enter the kitchen.  Take advantage of all the renovations you need to undergo as a way to make your house truly your home.

4) Controlling the Progress

Not only can you create what you want, but you can also control the work that goes into the renovations. This is important if you possess a keen knowledge of construction and all things related to home building. You can design specific projects while ensuring the quality of the work done as your vision comes to life.

5) Chance to Increase Your Home Value

Now, this advantage may be the most valuable one, especially if flipping houses is your chosen side hustle. Selecting modern and popular upgrades would certainly add value to the home and be beneficial should you eventually resell. Prioritize improvements to the flooring, wiring, and plumbing, as these will raise your home value.

Cons of Buying a Fixer-Upper

1) Not Move-In Ready

If deciding on a fixer-upper, remember that you cannot simply pack up, move, and sleep there that very first night. Most fixer-uppers require extensive renovations and are unsafe to live in immediately, hence the much lower purchase price. You will need to stay elsewhere while you start renovations to make the home worthy of occupancy.

2) Not Easy to Find

In desirable neighborhoods everywhere across the country, fixer-uppers are less available than turnkey homes.  A couple of ways to find one is by checking listings of distressed properties or through banks for repossessed homes.  Do your due diligence and never purchase a fixer-upper without setting eyes on it first.

If you are in a hurry to find that perfect house, a fixer-upper may not be the answer.

3) Additional Unexpected Expenses

Despite the lower initial cash outlay, a fixer-upper may actually cost you much more than you expected. There may be some undetected damage during the home inspection before purchase (unfortunately, experienced by many homebuyers). More often than not, these issues surface only after purchase and upon commencement of the renovations.

One way to prevent this event from happening is to ensure that a thorough inspection is conducted by competent professionals. You may still uncover some surprises later on, but these won’t be the pricey, earth-shattering kind.

4) Renovations Take Time

You may have supervised a bathroom remodel or a kitchen upgrade in a home you’ve lived in before. Experience tells you that these activities take time and are not pleasant. Imagine renovating not just one room but most areas of the house and living there while it is happening.

It takes a certain individual to thrive in a constantly dusty house wrought with construction sounds most of the day. The stress is real, and you need every ounce of patience you can muster to get through the day. More importantly, family members with respiratory issues may not bode well living in a house undergoing renovations.

5) Fewer Financing Options

Traditional mortgage lenders are wary of home upgrades, and most of them will downright refuse to cover renovations on fixer-uppers. They can still cover that lower purchase price, but getting more funding for required renovations would be more difficult. If your heart is set on a fixer-upper, ensure you also have the means to fund the home improvements.

The monthly mortgage payments are one thing, but you need to consider the costs of the renovations as well. If you are not careful, these expenses may even go higher than your monthly mortgage fees. Plan carefully, or this may leave you stranded while you scour for more funds to pour into the home.

When you’re ready to buy your dream home or a fixer-upper, contact me to help you with the process. Working with a professional makes the waters of house-hunting a lot less choppy.