Pros And Cons to Buying a Fixer-Upper

Owning a home is one of the best feelings one can get. It gives you a sense of accomplishment and confidence that can’t be achieved by renting. Even better, owning a home gives you the pride of ownership, and potential tax advantages.

Unfortunately, buying a home in Canada is not an easy feat. This is especially true if you’re on a tight budget. It’s no wonder a significant percentage of house shoppers opt for a fixer-upper than ready-to-move-in houses – it’s cheaper to buy.

But what exactly is the fixer-upper, and should you buy one? This article seeks to answer these questions by explaining what a fixer-upper is and outlining its benefits and drawbacks.

Feel free to jump ahead!

What’s a fixer-upper?

A fixer-upper is a house that’s available at a lower purchase price mainly because it requires considerable maintenance work. And although you can still live in a fixer-upper, you’ll want to do cosmetic and structural enhancements to match the typical home’s standards. A fixer-upper may be the right option for you if you want a bigger home for less money or are planning to make a profit by selling when you’re done. Either way, buying a fixer-upper may be beneficial or costly to you, as we’ll see below. A fixer-upper may be the right option for you if you want a bigger for lesser money or are planning to make a profit out of the home. Either way, buying a fixer-upper may be beneficial or costly to you, as we’ll see below.

Pros and cons to buying a fixer-upper

Buying a home that needs renovations depends on your budget, preferences, lifestyle, and needs. It might be the right thing to do for one house shopper and a bad idea for another. Either way, you’re likely to enjoy or suffer some benefits and drawbacks.

Here are some fixer-upper’s pros and cons you should bear in mind

Pros

Lower purchase price

Without a doubt, purchasing a house that needs renovations will be cheaper than buying a ready-to-go home. And although it’s hard to tell the amount of money you’ll save by purchasing an upper-fixer house, research shows that upper-fixer houses are listed at 8% less than the market value. Is 8% of your home’s value going to cover the reno costs? Choosing a home that has one or 2 outdated features that can be changed, can lead to a real win when you sell

Less competition

As you may guess, fixed-upper homes have less competition. This is because only a few people are willing to spend their money on a home that needs renovations. And with less competition means more house size for a great price.

Ability to buy in a desirable neighbourhood

When you go hunting for a house, the chances are that you have a particular location or neighborhood in mind. You may consider a fixer-upper house in your dream location when you find that the homes in the area are more expensive than you can afford.

Chance to customize the home to your tastes

Owning a home is great, but owning the home of your dreams is more fulfilling. When you buy a home that needs renovations, you get a unique opportunity to customize it exactly to your unique sense of style. You can remodel the rooms, change the flooring, update the interior layout.

The potential for profit

When you renovate and modernize your home you are increasing its value on the market. Also, you’re relieved of deductions such as mortgage interest and potential property tax deductions, all of these increase your profit over all.

Quality control

Buying a fixer-upper house gives you control over your renovations. That means you can choose the colors, materials, contractors, etc., of your choice.

Cons

Renovations are expensive

Although the initial buying price is low, you’ll end up spending plenty of money renovating the house. In some instances, the money you spend on repairs could exceed the mortgage amount you’d have paid on a newer home. Renovations are expected expenses for a fixer-upper and shouldn’t deter you from buying the home, but estimating what they will cost and how long you will take to get them done should be your most important factor.

Unexpected issues may arise

When you buy a fixer-upper, you’ll never know what’s behind the walls until you begin renovations. In some instances, a home may have defects that will increase the renovation costs. This is especially the case with older homes. Unless you’re a contractor, when you buying a home that needs work get an inspection.

Renovations are time-consuming and stressful

If you’re doing the reno’s yourself in your spare time sometimes it takes years to get them all done. Most people take on one project at a time so they don’t live in a wreck while they attack the jobs. Alternately even with contractors and the ever increasing difficulty getting materials renovating may take months to complete, depending on its size and the areas that need repair. And unless you live somewhere else, this could be stressful for you and your spouse.

Difficulties in budgeting

Although you can estimate the renovation cost, it’s almost impossible to identify an accurate figure. The chances of finding surprise costs are high, adding to the repairs needed. It’s a good rule of thumb to always factor an additional 10% over what you think, just so there are no surprises. This way the surprise might be coming in lower than expected.

The bottom line

Whether young or old, buying a home can be a fulfilling thing to do. Some individuals turn to the lesser expensive fixer-upper when purchasing a house. And while there are many pros and cons to this homeownership method, you should consider your budget, needs, and preferences first.

Have any questions?

The home buying process can be confusing and stressful, but we’re here to help!

Contact us if you need any support throughout the home buying process, we’re a hands-on, full-service realty team for Carleton Place and West Ottawa areas. This checklist is a great foundation, but nothing can replace an experienced realtor.