There’s no denying affordability is tough right now. But that doesn’t mean you have to put your plans to buy a home on the back burner.
Suppose you’re willing to roll up your sleeves (or hire someone who will). Buying a house that needs work could open the door to homeownership. Here’s everything you need to know to decide if this is the right move for you.
What’s a Fixer-Upper?
A fixer-upper is a home that’s livable but requires some renovations. Think cosmetic updates like wallpaper removal and new flooring or more extensive repairs like replacing a roof or updating plumbing.
While fixer-uppers need a little TLC, here’s why they may be worth considering, especially right now:
- They Usually Have a Lower Price Point. Because of the repairs involved, these homes are usually less expensive upfront than move-in-ready options. According to a survey from StorageCafe, fixer-uppers come with price tags that are about 29% lower, making them a solid choice if you’re having trouble finding anything in your budget.
- Less Competition. When ready to make an offer, you’re less likely to compete with other buyers focused on move-in-ready homes.
- Build Equity Faster. From choosing how to redo the floors to picking which cabinets you want in the kitchen, a fixer-upper allows you to design a space that fits your needs and style. And with innovative renovations, you can increase your home’s value faster and potentially see a significant return on your investment.
As The Mortgage Reports notes:
“If you’re a house hunter who’s not afraid of sweat equity, buying a fixer-upper could be your ticket to homeownership. Doing so could lead to big savings, even in some of the nation’s largest and most popular housing markets. Plus, adding the right features could help your investment.”
What To Know About Buying a Fixer-Upper
The possibilities of a fixer-upper are exciting, but there are a few things to consider first.
- Do You Have a game plan? Consider if you have the time, skills, or budget to tackle renovations. Be honest about what you can handle yourself, what you’ll need to hire, and if a fixer-upper is a good fit for your lifestyle. Remember, you’ll likely be living in a construction zone for at least a while.
- Prioritize the Repairs and Upgrades: Don't stress yourself out thinking you’ve got to do all the work upfront. Space out renovations over time in a way that makes sense for your budget and what’s most important to tackle first.
- Location Matters: You want the money you’re spending to fix up a house to be worth the investment. So, ensure the home is in an area with increasing home values and amenities locals love, like parks and restaurants.
- Get a Home Inspection: Hiring an inspector to inspect thoroughly before you buy is a must. What they find will help you understand what needs to be updated, renovation costs, and if it’s a project you want to take on.
- Budget for Surprises: Renovations rarely go as planned. So, be sure to set aside extra money to cover things like extended repair timelines, an increase in the cost of materials, or other unknowns that may come up.
Talk to a Lender About Financing Options: Some renovation mortgages are designed for homes that need a little work. However, they may have requirements like spending and timeline limits, so talk to a trusted lender to understand the fine print.
Bottom Line
Fixer-uppers aren’t for everyone, but if you’re open to doing some work, they can be a great way to overcome today’s affordability hurdles and find something in your budget.
With the right mindset and careful planning, you could turn a less-than-perfect house into the perfect home for you.
Would you consider taking the plunge if you found a fixer-upper that fits your budget and goals? If so, let’s connect to explore what’s out there.
