“Buy the worst house on the best block.”
This adage has been used time and again by real estate investors who advocate that the purchase of a house in need of renovations in a desirable neighbourhood is a guaranteed way to maximize your return on investment. In fact, renovating fixer-uppers and selling them at a profit is how many real estate investors have made their millions, and it has inspired many HGTV shows.
But, is buying a fixer-upper the right choice for you?
Taking on a home in need of renovations is not the right option for everyone. It requires a particular disposition to handle a fixer-upper, and if you aren’t handy or interested in do-it-yourself projects, you might regret buying a home in need of renovations. To help you determine if a fixer-upper is the right choice for you, here’s a list of pros and cons.
- The potential for profit – it will appreciate faster and add value to your home and result in more profit when you choose to sell
- The ability to buy in a more desirable neighbourhood – First-time homebuyers have a location in mind when house hunting, only to find out that the houses in the area are more expensive than they anticipated or can afford. In this situation, a fixer-upper can be a good strategy to get into the neighbourhood, as they are often more affordable.
- A chance to save money – When buying a fixer-upper, chances are you will do at least some of the renovations yourself. Simple projects like painting, hanging curtains, tiling, and laying flooring are easily accomplished by house owners themselves. This option will save you hundreds or thousands of dollars, depending on the renovation.
- Customize a home to your taste – When you buy a home in need of a facelift, you have the opportunity to customize to your unique sense of style. You do not have to live with the seller’s designed choices.
- Renovations are expensive – While you will pay less for a home in need of repairs, you have to prepare yourself to spend money over time. Once again, depending on the renovation, you possibly will spend hundreds of dollars per month over and above your mortgage payment. Before buying a fixer-upper, you need to consider the following, “do I have enough room in my monthly budget to afford renovations?” You can maximize the available space in your budget by searching for the best mortgage rates.
- Renovating is time-consuming and stressful – If you want to test the strength of your relationship with your spouse, try buying a home and renovating it together. Whether you choose to go the “Do it yourself” route or hire a contractor, renovating is stressful, messy, and disruptive. Renovating comes with unexpected costs, and delays, which can be very draining on the homeowner.
- Something always goes wrong – If you buy a fixer-upper, especially an older one, you will never be sure what is behind those walls until you start renovating. The possibilities for unwelcome surprises when renovating are almost infinite. If you don’t budget for these surprises you may find yourself going into debt to complete your renovations.
The bottom line, while there are many pros and cons to buying a fixer-upper, you should only attempt it if you are reasonably handy, have space in your budget to pay for renovations, and are comfortable living in a home that’s disorderly at times.
For more information on purchasing a fixer upper contact Noble Mortgages @ 416-241-2227