It’s no secret that buying a home is one of the most significant purchases you’ll make in your lifetime. With that said, the idea of buying a home might be off-putting due to the high sticker price. However, if you’re willing to put in a little extra work, you may consider buying a fixer-upper home with a lower price point.
You might be asking yourself — should I buy a fixer-upper home for my first home? In this guide, we’ll help you narrow your decision by explaining how to tell if a fixer-upper is worth it, the pros and cons of buying a fixer-upper, where to purchase fixer-upper houses, and more. So, is buying a fixer-upper worth it? Keep reading below to find out.
What Is a Fixer-Upper Home?
A fixer-upper home is a property that needs extensive repairs, remodeling, or renovations to be habitable or comfortable for living. Due to the significant work needed to be done, fixer-upper homes are often sold at much lower price points compared to homes of similar sizes in similar locations that are move-in ready.
Fixer-upper homes can consist of condos, apartments, single-family homes, duplexes, or even commercial buildings, and the level of repairs needed can vary, too. For example, some fixer-uppers may only need cosmetic repairs, such as new paint or refurbished flooring. In contrast, others may need structural repairs, such as new roofs, foundations, or plumbing and electrical systems.
Should I buy a fixer-upper? If you’re asking yourself this question after learning about what a fixer-upper is, it’s important to understand the work that goes into renovating a fixer-upper. You should also consider the opportunities with fixer-uppers, such as return on investment (ROI) and the ability to customize most of the home to your preferences.
Advantages of Buying a Fixer-Upper Home
Buying a fixer-upper can come with a wide range of advantages that can make this journey well worth it. If you’re interested in the idea of renovating a house into your dream home by investing in a fixer-upper, consider these benefits:
Lower purchase price: Buying a home can cost hundreds of thousands of dollars, which can make being a homeowner difficult for many, especially first-time homebuyers. One of the top benefits of buying a fixer-upper is that they’re often sold at a lower purchase price than similar properties in better condition. This makes it more feasible for homebuyers to purchase a home in a desirable neighborhood or a larger property that would otherwise be out of their budget.
Customization: Another perk of buying a fixer-upper is the ability to customize the home to your specifications throughout the renovation process. As you repair and remodel, you can choose paint colors, materials, finishes, and the layout you love the most.
Reduced competition: Renovating a home requires patience, and not every homebuyer can wait to move into their new home. With that said, fixer-uppers often have lower competition from other buyers, as many prefer move-in-ready homes. This can make it easier to negotiate and potentially get a better deal.
Return on investment: Buying a fixer-upper can offer a great ROI. By investing time and money into a dilapidated home, you can increase the property’s overall value, allowing it to appreciate over time and build equity. Additionally, if you decide to sell, you can earn more than the cost of the home and its renovations.
Rental opportunities: If you’re a real estate investor or interested in earning supplemental income, purchasing a fixer-upper and repairing it can allow you to rent it out for a steady income.
You may want to consider buying a fixer-upper home for many attractive reasons. From the ability to customize its features to purchasing a home at a reduced price, fixer-uppers offer many advantages.
Disadvantages of Buying a Fixer-Upper Home
While there are many reasons to consider buying a fixer-upper home, there are several disadvantages to consider to determine whether this process is right for you. Below are some of the potential drawbacks of buying a fixer-upper home:
Renovation costs: One of the top disadvantages to consider are the renovation costs that the fixer-upper requires to make it livable. While the initial purchase price will be lower, the overall cost can quickly rise as you make renovations and repairs. While cosmetic repairs like paint and lighting can be relatively affordable, structural repairs, such as HVAC systems or roofing, can cost tens of thousands of dollars. It’s important to set a realistic budget and assess the repairs the fixer-upper requires to ensure you can afford the renovations.
Time: Fixing a home will take some time, as it’s a labor-intensive process that requires careful planning and coordination with tradespeople and contractors. If you have limited time or resources, a fixer-upper might not be a viable option.
Unforeseen issues: As you begin to tackle your renovations, unexpected issues could be uncovered that can cause further financial strain, such as structural problems, plumbing or electrical issues, or hidden damage you couldn’t assess when touring the property.
Inconvenience: Living through a home renovation can be inconvenient and disruptive to your daily life, which may require you to find temporary living arrangements, limited access to certain areas of the home, or have to deal with noise and dust.
These are some of the potential disadvantages that come with buying a fixer-upper home. By considering these drawbacks, you can determine whether embarking on this journey is right for you.
Factors to Consider Before Buying a Fixer-Upper Home
There are a few key factors to keep in mind before buying a fixer-upper home, such as:
Budget: Review your financial situation to assess how much you can afford the purchase price and the cost of the repairs. It’s also important to factor in prices for unexpected issues that may arise, as well as the price of materials, labor, and permits.
Time: Renovating a fixer-upper can be a lengthy process, taking months or over a year to complete. Determine how much time you have available to devote to renovations and repairs.
Permits: Each jurisdiction has its own building codes, permits, and regulations. Familiarizing yourself with these can help you understand the legal requirements for buying a fixer-upper.
Location: As with any property, it’s important to assess the location and neighborhood by researching schools, amenities, and the future resale potential to ensure you’re making a wise investment.
How to Tell if a Fixer-Upper Is Worth It
Is buying a fixer-upper worth it? You can assess a few key indicators to determine whether you should buy a fixer-upper. Here’s how to tell if a fixer-upper is worth it:
Purchase price: To tell if a fixer-upper is worth it, look at the purchase price compared to other homes in the area and ensure the price reflects the cost of the necessary renovations. This can help you gauge the potential value after repairing the house.
Renovation costs: Getting an estimate and quotes of the required repairs, including materials, labor, and permits, from multiple contractors can help determine how much money you’ll need to put into the home.
Financing options: Explore your financial options, such as home renovation loans, interest rates, and repayment options, to ensure the financial aligns with your financial goals.
Resale potential: Look at market conditions to evaluate the potential resale value of the fixer-upper once your renovations are complete to determine whether a fixer-upper is a strong investment.
By performing due diligence on a real estate property with these factors to keep in mind, you can better tell if a fixer-upper is worth it.
Where to Buy Fixer-Upper Houses
If you’re wondering where to buy fixer-upper houses, there are a few places to look. One place to start is online auctions. Online auctions, such as those held at ServiceLink Auction, have a wide range of foreclosure, bank-owned, and short-sale properties for sale. In many cases, these homes are sold below market value and may need renovations and repairs, offering a great opportunity to fix up a home to your liking.
You can also buy fixer-upper houses by partnering with a real estate agent who works in the area where you’re looking. A real estate agent will have access to the MLS, a database containing a comprehensive list of homes for sale. You can also browse fixer-upper homes on real estate websites or drive through neighborhoods that pique your interest.
Tips for Buying a Fixer-Upper House
If buying a fixer-upper sounds right for you, there are a few tips to keep in mind such as:
Set a realistic budget: Create a feasible budget that factors in the purchase price, estimated renovation costs, and costs for unexpected expenses.
Conduct an inspection: If possible, hire a professional home inspector to assess the property who can provide a list of the renovations and repairs the home might need.
Understand the steps of renovating: Take time to familiarize yourself with the steps for buying a fixer-upper and the process of renovating so you can set your expectations.
Create a renovation plan: Outline the renovations and timeline that need to be followed to ensure you stay organized and on track.
Should I Buy a Fixer-Upper Home?
So, should I buy a fixer-upper home? If you’re asking yourself this question, use this guide as a resource. Understanding the pros and cons of purchasing a fixer-upper home, as well as factors to consider before buying a fixer-upper home and where to buy fixer-upper houses, can help you make a decision that’s right for you.
If you decide to buy a fixer-upper, turn to ServiceLink Auction. Through our online auctions, you can find a wide range of properties for sale that can fall under various budgets, allowing you to buy a home that meets your financial goals.