Fixer-upper homes are currently popular in the housing market because it increases home buyers’ confidence. But is buying a fixer-upper home worth the investment?
We’ll walk you through what a fixer-upper is, the pros and cons, and what to look out for when investing.
What Is a Fixer-Upper Home?
A fixer-upper is a home that is bought at a relatively low price, but will need major renovations and remodeling work that can cost lots of time and money. Some fixer-uppers are even purchased with the intent of “flipping” — remodeling the home then selling it for a higher value for profit.
How Popular Are Fixer-Upper Homes?
There’s a chance that you’ve heard of Chip and Joanna Gaines, stars of the popular HGTV show, ‘Fixer Upper’. In their show, Chip and Joanna have documented the process of transforming dozens of properties into stunning homes.
These types of shows glorify the process, but tend to skip over the complications, which leave many skeptical of investing, according to Mashvisor.
In a survey of 1,000 Americans, 57% believe that investing in a fixer-upper is not worth it while 20% believe they could save thousands of dollars by remodeling a fixer-upper instead of purchasing a turnkey home. On average, homeowners are expected to save upwards of $20,000 by purchasing a fixer-upper.
This depends on the housing market that you live in. The Street reports that Omaha, Nebraska is the best market to purchase a fixer-upper (62% cheaper than turnkey homes), while Boston, Massachusetts is the worst market (1% cheaper).
iLENDi Tip: If you’re looking to save money during the process, set aside 5% to 10% of the home’s expected market value after renovations for any complications. Learn more about how to save money when buying a home here.
What Are the Pros and Cons?
Now that you know a little more about buying a fixer-upper home, let’s get into the pros and cons.
- Lower purchase price (typically 25% less)
- Less competition in the market
- Chance to customize your home
- Quality control
- Less property taxes
- Creative leeway
- Opportunity to flip the home for more money
- Renovations are timely and costly
- Can be risky and complicated process
- Not move-in ready
- You may need a building permit if making structural changes
How Do I Find the Right Fixer-Upper Home to Invest In?
Here are some tips and steps that you can take to ensure you are making the right choice in your investment:
• Get a home inspection
• Estimate the renovation costs
• Determine if any permits will be required
• Identify what you can renovate yourself (DIY) or what you will need to hire help for (Read our blog post on how to plan a home improvement project to get an idea of the areas where you’ll need help!)
• Make a smart offer by not overpaying
- The fixer-upper industry is popular in today’s housing market because it increases confidence in home buyers
- Homeowners are expected to save upwards of $20,000 by purchasing a fixer-upper
- These homes are typically 20% less expensive than turnkey homes
What do you call alligators interested in real estate?
iLENDi can help you explore your loan options when investing in a fixer-upper home. From learning more about the loan process to finding a loan officer, iLENDi makes purchasing a home fun!