Buying a fixer-upper is tempting for many prospective home buyers. This is due to several plausible reasons. The first reason is affordability. However, remember that these kinds of houses usually need a lot of work. Nevertheless, investing in a fixer-upper can be pretty profitable if done correctly. Keep reading to learn more about the pros and cons of buying a fixer-upper and whether it’s worth the investment.
The pros of buying a fixer-upper include a lower purchase price and a less competitive market. Also, houses bought in this way are easy to customise, and there is a possibility to increase their value. On the other hand, the cons of buying a fixer-upper include expensive home updates, potential unexpected issues, and various unplanned expenses. Also, you should remember that buying a fixer-upper is a long-term process that takes time, effort and money.
Pros of purchasing a fixer-upper
Lower purchase price
One of the pros that first comes to mind when buying a fixer-upper is its lower purchase price. For many people, it is the only way to buy a property. Their price is lower than other houses on the market, as they need repairs. Their low prices make them popular investment options for investors who wish to invest but with a limited budget.
Generally speaking, the market is less competitive for fixer-upper houses as they need to be renovated or fixed. This simply means that few people are looking to buy such a property, so you are less likely to bid on a property. This also means there is no need to offer more money as in cases when several people are interested in the same property.
Easy to customise
This is pro many people find favourable. People often find their dream homes, but with certain aspects and features that impede the perfection conceived in their heads. Usually, it is either impossible to fix this kind of issue, or it’s too expensive. Buying a fixer-upper allows you to customise the house to your liking. Of course, this is quintessential if you plan to live there and not resell it after fixing it up.
The possibility of increasing home value
Fixing up a house increases the home’s value. You can drastically increase the home’s value when enhancing the areas that need improvement. Features that increase a home’s value include energy-efficient and new heating and cooling systems, quality flooring, a new roof, etc. For instance, when people hire Mornington real estate agents or any other local agents, they want to know about these things precisely to decide whether the price is suitable for what they offer.
Cons of purchasing a fixer-upper
Expensive home updates
As with everything else, there are several cons to buying a fixer-upper, too. The first and the most prominent ones are expensive home updates. Some renovation costs can really go high. When looking at fixer-uppers, check all the costly things around the house that need to be redone and then decide whether it’s worth the money. It would be better if it had only one or two, at the most, extremely costly things to do.
Also, what often happens with fixer-upper homes are unexpected issues and hence, costs. There are potential problems that you can’t see initially. Even with a proper home inspection, some problems can’t be foreseen. Such issues can lead to extra costs, making your investment less profitable. This is simply a risk you must take.
Besides the unexpected issues that can be pretty costly, there is also a high risk of unplanned expenses when it comes to buying a fixer-upper house. It is vital to set a budget for these kinds of things to stay within budget. Additional repairs can easily lead to major unplanned expenses. So, just keep a part of your budget open for that, as they are a completely regular occurrence.
Another con of buying a fixer-upper is the fact that it is a long-term project. It can rarely be completed over a short period of time. Renovating or fixing a house can take up from several months to several years, depending on your budget, time and overall condition.
Buying a fixer-upper can be a great and profitable thing, only if you approach it in the right way and with a clear mindset.