Does it make sense to buy a fixer upper or a house that’s already been renovated?

To be or not to be? That is the age old question. However, with the advent of HGTV’s famed show, Fixer Upper, the question of whether to buy a fixer upper vs. move-in ready home has become a popular one. When it comes to home buying, people often ask us what the difference is between a fixer upper vs. move-in ready home and whether it makes sense for them to buy a fixer upper or a house that has already been renovated.

The short answer is, it depends. Buying a fixer upper vs. a move-in ready home really depends on the buyer and their goals.

If you are asking yourself, should I buy a fixer upper, here are some important things to consider:

Your current lifestyle

When deciding whether to buy a fixer upper vs. move-in ready home, consider your current lifestyle. Renovations take time (2-4 months) and patience. Do you have the time that it will take to renovate your new home? If you are very busy; or if you need to move in right away, a fixer upper may not be the right fit for you.

The benefits of buying a fixer upper

On the other hand, if your lifestyle is flexible, there are many upsides to buying a fixer upper vs. move-in ready home. First, picking out your design finishes is a big motivator. Often, buyers want to have a say in how their new home will look, i.e. paint colors, cabinetry, countertops, flooring, etc. Choosing design and material finishes gives a personal touch that buyers can’t get with a move-in ready home.

Second, buying a fixer upper vs. move-in ready home means that you will avoid the crazy competition. Why? Because so many buyers are in the market for move-in ready houses. Not as many people buy fixer uppers. That means you can usually get a better price.

Third and probably most important, locking in a mortgage rate on a lower purchase price is crucial. Buying a house that needs more work keeps your original loan down and your monthly mortgage payment low. Additionally, renovating creates built-in equity. For example, if a buyer purchases a fixer upper for $400,000 and invests $100,000 in renovations, the after renovation value (ARV) will be $575,000. That buyer created $75,000 in automatic equity! Also, there are varying degrees of work needed on a fixer upper. There are varying levels of how good the deal is as well. It’s possible to find a deal that just needs a kitchen renovation or a bathroom renovation. Some fixer uppers require a complete overhaul for $200,000; while others may only need cosmetic fixes such as paint and carpet for $10,000.

The disadvantages

The main disadvantage of buying a fixer upper vs. move-in ready is cash. In order to buy a fixer upper, you need to have cash. Using cash to fund the renovation helps keep the mortgage down. If cash-in-hand is an issue, there are ways to find additional cash. Taking a home equity ling of credit, borrowing money from family, or cashing out your investments are all viable options to consider.

The commitment

Buying a fixer upper is a big commitment, not only with your time, but also with your money. Have an honest conversation with yourself. We meet a lot of people every year who want to buy a fixer upper, but they end up buying an already renovated house once they factor everything that goes into a renovation. Often, clients think they want to buy a fixer upper and then later realize the cost and timeline is too much of a commitment. To save yourself time and money, it’s important to have this honest conversation with yourself before you get too invested in the renovation process and then realize it’s not the best fit for you.

Finally, every situation, family, and budget is different. If you are exploring buying a fixer upper, reach out to us. We would love to explore it with you. Call 571-623-0956.