Pros and Cons of Buying a Fixer-Upper

Real estate investing is a tricky business, and buyers looking to purchase a piece of property that needs work – commonly referred to as a “fixer-upper” – know it better than anyone. Whether you’re a first-time or experienced buyer, it’s important to have an idea of the benefits and drawbacks of going this route before taking the plunge.

Benefits of Buying a Fixer-Upper

Lower initial purchase price. Generally, fixer-uppers cost less than properties that are move-in ready. This can make them attractive to savvy investors, as a price decrease gives you room to enact renovations at a reasonable cost.

The opportunity to increase value. Unlike with move-in-ready homes where you have limited monetary options for improving a property’s value, a fixer-upper offers much more leeway. By making the necessary repairs and upgrades, you can often create a property that’s worth significantly more than what you originally paid for it.

Do-It-Yourself potential. Without any necessary repairs or upgrades, it’s by no means a requirement that you take them on yourself. That said, many buyers find it incredibly fulfilling to take on some of the work, and in some cases, the right project can even save you money that would otherwise go to a contractor.

Drawbacks of Buying a Fixer-Upper

Unexpected costs. Renovations for fixer-uppers can cost more than anticipated, especially when unexpected surprises surface during the process. The only way avoid this is to do proper inspections before making a purchase and having ample emergency funds set aside in case of expense.

Lengthy process. Unlike move-in-ready homes, fixer-uppers spell trouble in terms of timing. Pertaining largely to the work that needs to be done before you can move in or begin renting out, you should also be prepared for extra costs that come with postponing a move or the start of a tenant.

Risk of problems. When it comes to fixer-uppers, there’s a risk of the property having unfixable flaws, especially in the case of older homes. Make sure to have the property inspected before you buy to get a full inventory of issues and a clear idea of the time and costs associated with the repairs.

MakeYour Decision

Fixer-uppers are a great option for buyers who are looking to get a decent return on their investment. With that being said, it’s important to do your homework beforehand and understand the full scope of the work that needs to be done. Getting a qualified inspector is key to avoiding the headaches that can come with a fixer-upper, and have a few contractors come in to provide you with an estimate can help you decide whether this type of property is right for you.