Have you ever considered buying a house that is considered a “fixer-upper”? Sometimes we shy away from these because we just aren’t sure if it’s a practical move or not. We all want to buy our dream houses but could it be possible that a fixer-upper is that dream house in disguise?
Check out our pros and cons below – they may just help you make your decision!
PRO – The first and most obvious reason to purchase a fixer-upper is the price. There are often significant savings over buying other homes. It’s important though to think beyond the short-term savings and consider the long-term financial burden when assessing whether this purchase is worthwhile or not. What will need to be repaired/renovated? How much will those repairs and renovations cost? How soon must those projects be completed?
PRO – There are often fewer competitors interested in purchasing a fixer-upper. This can be especially helpful in areas with low housing inventory and a high level of competition (which of course, may lead to higher prices and bidding wars).
PRO – To a degree, a fixer-upper can be somewhat of a blank slate for you to customize the way you want.
PRO – You may have the opportunity to build the equity in your home quickly depending on the types of changes you are making to your fixer-upper.
PRO – You may be eligible for certain loans or tax breaks/rebates based on the types of repairs and renovations you are making.
PRO – For someone who loves being creative and working with their hands, this could be an ideal purchase.
CON – Expect the unexpected. Even with a home inspection (and you need a home inspection), there are often surprises along the way. You will need patience and it’s advisable to have a separate budget set aside to accommodate those unplanned expenses as needed.
CON – Some of the updates that may be required won’t be terribly effective in increasing the equity in your home. Invisible repairs such as plumbing and electrical system overhauls may not raise the value of your home enough to offset the cost of those renovations. Unless you are receiving a significant discount in the initial cost of the home to accommodate these repairs, this is something you want to consider carefully.
CON – When purchasing a new home, you have some options in choosing location. With an established home, you are obviously locked into a specific location. You always need to consider the location but with a fixer-upper, there can be another important consideration. After completing the renovations to your home, will you have raised the value of your home to a point where you have now priced yourself out of the neighbourhood? Resale can be trickier if your home is priced much higher than the rest of the homes in the area and you may have to take a loss in order to get your house sold.
CON – Sub-contractors need to be carefully chosen. We’ve all heard horror stories about home renovations gone wrong so it’s essential to find reputable contractors or you may find yourself losing money, time, and patience.