There are several questions you should ask yourself before deciding on a property that needs many repairs or renovations (commonly called: fixer-upper) or a move-in ready property.
Are you handy? Do you know contractors or other trades people? Do you like projects? It used to be that people that were willing to take on a ‘project’ could get a bit of better deal. However, now with the stiff competition and lots of contractors who are also competing for a declining number of homes in need of renovations, these types of homes are just as popular.
While in theory you are paying less than a house that is already renovated, it does require different financing. You might be purchasing the house for a smaller value but you will need to have access to more liquid cash later to complete the tasks. Not to mention there is often a long wait time to secure a contractor who is right for your property.
Below are the pros and cons between a completed house and a Fixer-Upper:
- Move-in ready
- Most people are able to get a mortgage for a higher amount than they have access to cash for
- Not having to live through construction/delays etc
- Superficial changes can help the space you love e.g. good furniture or personal decorations
- Might not be to your style or there could be elements you might wish you could change
- May be more expensive depending on the area and the kind of property you are looking at
- Able to create the space you want
- Could possibly pay less for the upgrades if done DIY depending on your experience
- Can add value to your property by updating key areas including the kitchen or bathroom
- Personal satisfaction when completed
- Long wait times for contractors
- If you are doing the work yourself – longer times until completion
- Surprises (situations that might not have been accounted for)
- Costs could outweigh savings
- May be stressful if continuing with normal work days during this time