Should you buy a ‘Fixer-Upper’ Property?
A fixer-upper property is one that requires renovation or additional investment to live in properly. These homes are typically cheaper on the market as they are incomplete, but what are the benefits, and risks, of properties like this?
- A property requiring renovation is an opportunity to add your own style. A dream for many, a ‘fixer-upper’ property can have aspects of the house that is a blank canvas to which you can create the perfect house. If the property will be yours in the long-run, this may mean you do not need to move in the future for many years, creating the perfect environment that satisfies your own tastes and needs.
- Fixer-upper properties are typically cheaper to buy as the seller is looking for a reduced price after taking into consideration the work that needs to be done. The investment needed may not be urgent, meaning you could renovate and invest at a time that financially suits you.
- A property is usually the most expensive thing a person purchases. A fixer-upper property may be seen as an investment opportunity to buy a house that would previously be out of reach financially. Once renovated, the property could be sold for a substantially larger price which means a tidy profit can be gained that could be the price of a car or more! On top of purchasing the property for a lower price, like any other property, there will still be scope to negotiate with the seller.
- A fixer-upper property is certainly a project. If you are somebody who has the time to do some of the work yourself, then you can take on a project that is both exciting and rewarding. You will save money, and be able to enjoy the benefits of all the hard work you put in.
- Arguably the most important consideration of whether you should purchase a fixer-upper property is the nature of what needs to be renovated. A fun project can easily become a nasty burden that is interfering with your lifestyle.
- Larger projects, like needing a new kitchen or a bathroom, require thought over whether the project is worth your time and money. The property is at a lower price for a reason, because work needs to be done, and it may be the case that the investment required would make the project out of the reach of your budget. This is a very dangerous situation to find yourself in after taking the project on.
- Depending on your personality, having an incomplete home may tarnish your view of your new property. The house may take a long time to finish, and you may find your appreciation and love for your property fades away. Time constraints can apply for a number of reasons and there will likely be one or two issues you need to deal with along the way. Therefore, it is important to know how flexible you can be with your budget and the timescale of how long you can allow the project to take. From taking the project on yourself, it will become an added responsibility.
- A fixer-upper property may appear to be a bargain at first glance, but if there is work that needs to be done on the property already, consider the nature of this work and whether more may need to be done in the future. It is very easy to underestimate the amount of work required on a fixer-upper property.
- You must ask questions upon considering any property. For properties that require additional work, ask questions like: Could there be hidden costs like other work that will reveal itself in the future? Why is the seller selling the property? Can they not afford the costs required themselves? Is the price a reflection of the work needed? Avoid being trapped with a property that requires more money to complete than the properties you originally deemed as out-of-budget.
- You must consider your situation, are you in a position where you able to deal with the worst-case scenarios: Will your work commitment impede on the renovation timescale? Do you have a young family or a new-born on the way? Will you be able to live on the property whilst it is being renovated? Can you afford to pay for the work to be done if you can no longer complete it yourself?
There are plenty of benefits and risks for fixer-upper properties. Each fixer-upper property will differ in what exactly needs to be renovated, the investment required to get it up to scratch and the price that would be accepted for the property.
Decide on your own financial situation and preferences and see whether a project can be facilitated without impeding your lifestyle. There are benefits to be had, but also problems, so consider your own situation and your situation in the near-future to make the right decision.