Home prices continue to rise, which is keeping many a renter out of the market. But, fixer-uppers present a potential opportunity. For starters, the lower prices create the affordability that is lacking in other segments of the market. So should you be looking for one? We’re breaking down the pros and cons.
The ability to buy a house:
Median home prices are at a record high, while affordability is at one of its lowest points. The reality for many people is that there seems like there is no end in sight to renting. A fixer-upper may present an opportunity simply because of the lower price point that gets you in the door.
Pride of ownership:
Pride of ownership is a real thing for homebuyers. And that pride grows even stronger when you’ve had a hand in making improvements.
Expecting the unexpected:
You know how on every episode of every renovation show on HGTV there’s something in the wall or under the floor or in the attic that makes taking down a wall impossible, or at least price-prohibitive? Get ready for a whole lot of that.
Certain renovations can seem expensive because the labor is factored in. If you’re doing the work yourself, you’ll be amazed how far your money can go.
Deciding what you can handle:
If you’re handy—or merely patient and a quick learner—there may be no limit to your ambition as it relates to buying and fixing up a home. But it behooves you to be realistic, and painfully honest with yourself. Do you have the patience for a massive project? Are you the type who always finishes what you start or is it more likely that you’ll end up in a half-done construction zone for months (or years!) on end? How strong is your marriage (because it WILL be tested)? These are just a few of the questions you’ll want to ask yourself before you take the fixer-upper leap.
Growing your skills can be lucrative:
The more you learn, the more you can apply to your home. But have you thought about how those skills can translate outside of this one home? Maybe buying and fixing up homes sets you on a new career path.
Paying the right price:
Figuring out what to pay for your fixer-upper might not be so easy because you can’t make an apples-to-apples comparison with a home in better condition based on the standard price-per-square-foot equation.
“Unlike buying a house that’s move-in ready, figuring out the market value of a fixer-upper isn’t a simple matter of comparing it with nearby houses that have the same number of bedrooms and bathrooms and so forth,” said NOLO. This makes working with an experienced real estate agent even more important. Knowing how much a property is worth and where to start when it comes to negotiations is key to getting a good deal.
Increasing your home’s value:
Greater affordability may be the immediate driver when it comes to buying a fixer-upper, but the potential for appreciation is just as important.