Comparing Home Fixer-Uppers Vs. Turn-Key Properties

Every real-estate investor has to think about which type of property suits their investment goals the best. To simplify this decision-making process, this article will focus mainly on the pros and cons of home fixer-uppers and turn-key properties.

Overview

An important difference between the two property types is that turn-key properties are typically ready-to-rent buildings and require no rehabilitation or repair. On the other hand, a fixer-upper involves a need for renovations, repair, and remodeling before it can be rented. Both types of properties come with their own sets of risks and rewards, so it is important to weigh each option carefully before making a purchase.

Pros and Cons of Home Fixer-Uppers

Home fixer-uppers can often be purchased at a discounted price, making them an attractive choice for investors who have a limited budget. With fixer-uppers, there’s also an opportunity to add value to the home by making necessary repairs, updates, and remodeling to increase its market value. However, fixer-uppers also require significant financial resources in order to make them safe and functional.

Pros and Cons of Turn-Key Properties

Turn-key properties offer convenience for those who would prefer to purchase a home that is immediately rentable. These properties also typically require less ongoing maintenance than fixer-uppers. On the other hand, turn-key properties typically come with a higher price tag, leaving the investor with limited potential to make a return on their investment.

Factors to Consider when Comparing

The decision-making process to choose between a home fixer-upper and a turn-key property can be simpler if investors keep a few factors in mind.

Budget

The financial capacity of the investor plays a key role in this decision. Fixer-uppers typically require significant resources, both financial and time-wise. On the other hand, turn-key properties are often too expensive for some investors.

Risk Tolerance

It is important to consider the investor’s risk tolerance. Fixer-uppers involve a higher risk of unexpected costs due to unforeseen repairs. Turn-key properties may carry maintenance, managed care, and administrative costs, although these are usually lower than the costs for renovating a fixer-upper.

Time Commitment

Investors who are short on time and/or resources should consider purchasing a turn-key property. Although fixer-uppers typically have a larger potential for returns, they also require more commitment and time investment in order to turn the property into something rentable.

Should You Invest in Home Fixer-Uppers or Turn-Key Properties?

Ultimately, the decision between investing in a home fixer-upper versus a turn-key property comes down to the individual needs, goals, resources, and risk tolerance of the investor.

Before investing in either a home fixer-upper or a turn-key property, it is key to make sure you have a comprehensive understanding of the differences between the two, as well as carefully evaluate your own resources and goals. Consulting with experienced professionals can help you make a well-informed decision and avoid costly mistakes.