Most people prefer to buy a home that is in reasonably nice condition with an up-to-date style. House prices, however, have a way of leading to disappointment about what your house budget can buy. For this reason, you might start to look at properties in need of renovation because they have lower prices. This inevitably leads to the question of should I buy a fixer upper?
This is a good question to ask because buying a fixer upper means a big commitment in terms of time and money to make it the home that you want. Although a house that is already updated will cost more, you receive immediate value. You don’t have to live with eyesores and contemplate how you’re going to pay for repairs and renovations.
Both choices present advantages and disadvantages. Many people know that they don’t have the patience to deal with a fixer upper.
On the other hand, if you’re open to the idea of buying a fixer upper, then it will be helpful to compare and contrast your choices.
Advantages of Buying a Fixer Upper
Increase home value
The first advantage of buying a fixer upper is that it should cost less than comparable homes in better shape. Hot markets for sellers can make the prices on fixer uppers look absurd, but those prices should still be lower. A fixer upper simply cannot demand the same price as something of similar size and location in good condition no matter what some sellers like to imagine.
The lower price theoretically presents you with an opportunity to unlock the true value of the property through the fixing-up process. By updating a home cosmetically and correcting its broken or worn-out issues, you raise the home’s value.
You are not protected from the possibility of a drop in home prices, but such an event is harmful to all homebuyers. In fact, it could hurt more to pay top dollar for an updated home and see its value drop than having the same experience with a fixer upper.
Assuming that the market in the area of the fixer upper remains stable, you can expect to increase its value through renovations.
Once renovations are complete, the home should appraise at a higher value. This results in a big boost in equity in a short amount of time compared to making loan payments on a house that did not need fixing up.
Take pride in the work
Some people find great satisfaction in the results that they achieve with their hard work. Especially if you intend to live in the fixer upper long term, you will experience daily enjoyment as you see the improvements that you made.
Make it the way you want it
A fixer upper gives you the opportunity to renovate the home according to your tastes and lifestyle needs. The paint colors, flooring, fixtures, and anything else that you repair or replace will reflect your personal choices.
You can do these same things with an updated home, but you will be removing items in good condition. With a fixer upper, you take out what is old or broken.
Disadvantages of Buying a Fixer Upper
Money pit anyone?
Fixer uppers are money pits. Even when you know this going into it, the constant need to pay for materials and permits and sometimes hire contractors can wear down your wallet.
You hit a bad snag
On top of the expenses that you expected going in, a fixer upper can surprise you with terrible problems. You might suddenly need to replace a septic tank or replace all of the wiring or plumbing. The foundation could be bad, or you discover mold.
Issues like these can torpedo your budget.
You become disillusioned
Even if things are coming along all right, you could discover that the work is not satisfying for you. You might hate living in a construction zone. The dust, bare drywall, or bare-dirt yard might depress you, and you wish you could just live somewhere that is complete instead of the ongoing battleground that you’re making payments on.
Advantages of Buying an Updated House
No immediate repairs needed
An updated home in nice condition should not trouble a new owner with any major issues during the first years of ownership. Plumbing, electrical, roofing, foundation, and HVAC should all be in working condition and up to code.
Home value should align with the current market
If no big renovations are needed, then the property should maintain a value representative of current market conditions. Unless the market crashes, you can expect the price that you paid to be recoverable should you need to sell in the near future.
Even if you planned to stay in the home, things could come up that motivate you to sell it, like moving for a new job or getting married or divorced.
No stress and mess
When you buy an updated home, you get to move in and simply enjoy living in your new abode. You won’t be tearing out any walls or floors or dealing with leaky plumbing.
Disadvantages of Buying an Updated House
You want different finishes
A nicely updated home that fits your budget and is in your desired location should be perfect, right? Well, it might check off important boxes, but maybe you hate the paint colors or flooring choices. The kitchen layout could be awkward, and you want to change it. Perhaps you want to add another bathroom or take out a wall. Although these are personal preferences, you are still confronted with the need to invest in remodeling.
Poorly executed renovations
Pretty people commit crimes too. An updated home might look good on the surface but hide ugly (expensive) problems.
- New windows? That’s nice, but are the frames rotted?
- New plumbing? Great, but was it installed by an unlicensed person with questionable skills?
- New furnace? Good to have but is it high efficiency or a cheaper model that uses more energy?
Read more: Flipped House Red Flags to Watch Out for
Different Types of Fixer Uppers
Not all fixer uppers are created equal. There are many levels of hell.
Cosmetic fixer upper – The house has old, outdated finishes but is otherwise structurally sound with modern plumbing and electrical. It probably needs new HVAC, but other than that, renovations will be surface level in nature.
This type of fixer upper was normally built in the late 1970s or thereafter. Issues with lead paint or asbestos should be absent. House flippers look most for these types of fixer uppers because they are mostly modern buildings that can be made to look good again.
Old, damaged, but still livable – Any number of things could be in desperate need of repair, like the roof, chimney, or porch. The house remains structurally sound and has functional plumbing and electrical, but leaks are imminent or have already started. Drywall is broken in places or water damaged. To make the place shine again, you’re looking at roof replacement, rebuilding rotted porches, or installing new drywall.
Overall, the renovation budget will be higher, but you can limp along living in the house as you gradually resolve its problems.
Needs a full gut job – You won’t be able to move in right away because you need to fix subflooring, plumbing, wiring, and HVAC. You may need foundation repairs, and you are pretty much starting from scratch with the kitchen and bathroom in terms of flooring, cabinets, and appliances.
Ready to Buy a Fixer Upper?
Not everyone has the temperament or desire to buy a fixer upper. If you have the right personality and really want to make a dump and dream house, you’ll find the experience of renovating a property satisfying and maybe even financially rewarding in terms of having a lower house payment or the chance to sell for a profit.