Whether you’re a real estate investor or just someone looking for a new home, fixer-uppers can be tempting. However, before you commit to one of these properties, you must know their risks. A fixer-upper property may seem like an incredible deal, but it can quickly turn into a bad idea. That is because of several factors that are very hard to predict. So, before deciding whether the property is worth it, you should know the exact pros and cons. And, of course, the decision is ultimately up to you, but remember to consider everything. To help you make the decision, we put together a list of the pros and cons of buying a fixer-upper, and we hope you find it informative.
Pro: the initial cost is typically much lower
One of the main reasons people get tempted into buying a fixer-upper property is the purchase cost. Because these properties are typically in bad condition, they cost much less than other properties in the area. That draws in potential buyers and investors, and it’s an excellent reason to buy one of these properties. On the investing side, it can mean pulling a crazy amount of profit out of one property. On the other hand, homebuyers can be tempted to buy a house in a good neighborhood for a low price. So, the initial cost is one of the main selling points of fixer-uppers. However, buyers should still be aware of hidden fees involved in buying a property. Especially when aiming to buy a property because of how cheap it is, getting slapped with hidden fees can be surprising.
Pro: there’s a lot less competition
Another great thing about buying a fixer-upper is the lack of competition. After all, not many people want to buy properties they need to work on. Most people nowadays want to buy move-in ready homes, which fixer-uppers decidedly aren’t. So, when buying one of these properties, you don’t have to worry about bidding wars. Additionally, there isn’t as much pressure when offering the property. Of course, you still shouldn’t lowball your offer, as the seller might deny it anyway. But, because there is much less competition, negotiating the price is generally easier. However, you should be aware of some dangers of working on fixer-uppers. Safety should always be a priority, especially when working on home improvements. Unless you’re careful and take the necessary precautions, it’s very easy to get injured. So, take your time and make sure you’re doing everything safely.
Pro: you choose where the money goes
When working on a fixer-upper, you choose exactly where the money goes regarding improvements. That allows you to work on the parts of the home that matter most to you. For example, if you want to ensure the bathroom is extra comfortable, you can focus on that. Or maybe you want a home office or a nice kitchen. Whatever your preference is, you are entirely in control of home improvements, so you can make them happen. That is the main reason homebuyers are attracted to fixer-upper properties. However, it’s essential to know how to spot potential in a property, especially when looking at fixer-uppers. More for real estate investors, but knowing how to spot a property with the potential to be very valuable is quite valuable. So, take your time and watch for excellent properties.
Con: you never know what issues you might find
One of the most significant risks of fixer-uppers is issues you can’t spot immediately. For example, you might rip up your new project’s flooring to find asbestos in the subfloor. That then leads to an entirely new, expensive, and hazardous problem. A common issue people encounter is finding rot in the beams while replacing drywall. So, in truth, you can never know what sorts of issues you will run into while working on a fixer-upper. That is how a potentially good investment gets turned onto its head and becomes a time and money sink. However, you can save it if you add value to the exterior and interior. Renovating a balcony, for example, is a great way to do this. Homes with lovely interiors are typically much more valuable than homes without them.
Con: plan to go over budget on the project
It’s a sad truth that most fixer-uppers go over budget. According to real estate stats, 4 out of 10 fixer-uppers end up going over budget. As we already mentioned, that is because you usually run into issues you didn’t know were present. As such, you should have a very large budget for the project before deciding to commit to it. Finding the money to fuel this project can be somewhat tricky. Taking on leans is risky, but it’s an option. Just remember that you should only use credit cards for minor fixes. And, of course, only work with professionals regarding renovations. If you spend a lot of money anyway, you might as well ensure everything is done correctly. Also, you should know the difference between a home warranty and home insurance, no matter what property you decide to buy.
The pros and cons of buying a fixer-upper – wrap up
Investing in a fixer-upper property is a risky endeavor at the best of times. As such, it’s essential to know the pros and cons of doing this before deciding to commit to it. Yes, the profit potential is there, but there’s also quite a risk involved. And according to the stats, the odds aren’t in your favor when it comes to these kinds of properties. We hope this list of the pros and cons of buying a fixer-upper you decide, and we wish you a good day.
