Pros and Cons of Buying a Fixer Versus a Move-in Ready Home
Buyer a fixer property can be a great way to get into a home for less money. These properties are usually described with terms such as “needs TLC”, or “fixer-upper”, or in extreme cases “contractor’s special”.
Pros
- The property cost less than it would if it were completed fixed up and move-in ready. This may allow you to get into a better neighborhood that would otherwise be outside of your price range
- You can save money by fixing it up yourself
- You get to be your own designer. You may end up spending the same amount after renovations, but you’ll be customizing it to your taste and lifestyle
- There is less competition as most folks are wary of having to deal with construction and repairs. They may also not see the potential in the run-down state
- You can defer some improvements to later, when you have saved up some more cash
Cons
- Cost of improvements may outweigh the discount received
- There is a higher chance of unknown issues since the property was not maintained
- You have to deal with the headaches of design, permitting (through the city) and construction
- You may have to pay out of pocket for the renovation costs
- Less financing options. Many lenders many not lend on properties that have significant issues.
- Dealing with construction means disruptions to your home life – noise, dirt, lack of privacy, loss of use, etc.
In general, you should definitely consider cosmetic fixers (usually requiring simple updates such as carpet change, new coat of paint, landscaping, updating appliances, etc.) as a great way to save money and update the property to your tastes. Homes that require more extensive work (e.g. foundation issues or contains hazards such as astbestos and disintegrating leaded paint) or is a registered historical building should be given more caution as there is a higher chance of runaway costs. That said, there are always opportunities so long as you get qualified advice.
