When you’re in the market to purchase a new home there are a lot of different options out there on the market. Purchasing a home is more than just deciding on where to live but it’s one of the largest investments people will make in their lifetimes. When making any investment we want to invest in the item that has the most possible potential value growth, in other words we want to “buy low and sell high”. You make most of your profit on the buy, so when purchasing a house you want to find a property that is ideally listed below market value and a great way to do this is by buying a “fixer upper”. I know all of the home “diy” shows make it look romantic, fun and somehow get it completed within an hour but investing in a fixer upper can be an absolute nightmare if you don’t know what you’re actually getting into. So let’s take a look at the good and the bad when it comes to buying a fixer upper. 

Let’s start with the good!

The great thing about purchasing a fixer upper is obviously the price! This is really the ONLY reason why you would ever purchase a fixer upper to begin with. You can get a property often times tens of thousands of dollars cheaper than other homes within the area and with a little TLC can oftentimes be worth as much or more than the neighborhood comps. Another benefit of buying a fixer upper is making it your own. If you plan on living in the home for a while you get a home that is tailored to your family’s needs and desires while also maximizing your investment. You can get access to better neighborhoods. Buying a move-in ready home in your desired neighborhood may be out of reach for your budget but buying a fixer upper can close that gap and is also something you can upgrade over time.

Now for the bad :(

Don’t forget that there is a reason that it’s a fixer upper. Meaning, it has significant issues that have scared off countless potential buyers. If you’re not experienced in construction or have a solid opinion of a trusted inspector can be a money-pit nightmare. You never know what’s actually wrong with a home until you open up the walls, floors and plumbing which can cost you dearly and eat up and perhaps cost way more than all of your profit margin. A fixer upper is a long term project and if you are going to be living in the home during the remodel it can be quite strenuous on your family and relationships. From the constant mess, money issues, water damage you didn’t know about, it will really put you to the test emotionally. If you’re hiring someone to do the remodel the risk of a bad contractor is absolutely real. If building codes, city ordinances or HOA codes aren’t adhered to this can completely devastate your investment and can turn the “American Dream” of owning a home into an absolute nightmare. 

So, what should you do?

Do your homework. Take into account the comps in the area to get a feel for what the value of the home could be. Get an inspection done and an estimate to how much a renovation would actually cost and the timeline of doing said renovations and be sure the home cost plus renovations is within the potential home value and your budget. Make a “must have” list of priorities and a timeline for each item when it comes to the renovation and stick to it regardless of circumstances. Doing a renovation if you don’t have a detailed plan and timeline you can easily spend double what you budgeted and take twice as long. You will always have unforeseen issues come up and you need to have contingency worked into your budget. But if you don’t hold fast to your plan the list of to-do’s will just keep growing and will blow your entire budget wide open. Buying a fixer upper can be an awesome experience if done right but do understand there are risks but if you do the proper planning, budgeting and both of those things align then it is absolutely worth the investment.