Should I Buy a Fixer-Upper?
“Should I buy a fixer-upper?” If this thought has crossed your mind, we don’t blame you. Many home buyers fantasize about purchasing a run-down shack and transforming it into a palace (thank you, Chip and Joanna Gaines). Still, pipe dreams aside, should you actually do it?
While they aren’t for everyone, experts do say that there are many real reasons to buy a fixer-upper. Here are a few to help you figure out whether this type of house is right for you.
1. Because fixer-uppers are bargains
Probably the most obvious reason to go for a fixer-upper is to get a great deal on a house.
In fact, Dan Bawden, remodelers chair of the National Association of Homebuilders, says people shopping for a fixer-upper can expect to spend 20% to 25% less than what they’d have to shell out for comparable homes that are move-in ready. Homes with serious issues—such as with the foundation, termites, or flooding—should command an even deeper discount.
All that said, keep in mind that fixer-uppers will require that you spend more money on renovations. So make sure to have a contractor walk through the house and estimate what these repairs will run so you have a good handle on the full cost.
Bawden also suggests you pad your renovation budget by at least 5% to cover any surprises. “There are always unforeseeable things, and you need to be able to cover that,” he says.
2. Because you want to make a home your own
If your dream is to live in a home where everything is done precisely to your taste, then a fixer-upper is a great fit. Sure, you can build a house from the ground up, but that’s an expensive prospect, costing a median of $289,415 (cost of the land and many other necessities not included). Besides, building a home from scratch takes time, too—so if you need a place to live now, a fixer-upper might allow you to move in before you start turning it into your own personal Pinterest-board come to life.
Just keep in mind that living in a demolition zone can be dangerous or just an enormous hassle, so talk with your contractors about what to expect once renovations get rolling—and if there’s a way to divvy up what they’re working on to carve out a peaceful corner so all the commotion doesn’t drive you nuts.
3. Because you love a home with history and character
Fixer-uppers are often old—constructed back in the days before cookie-cutter plans ruled the landscape. As such, they’re often steeped in history and personality and just need a little love to shine. For instance, those solid oak doors will look amazing if you just stripped off those many coats of paint, or you might get a kick out of preserving that outdated dumbwaiter or coal chute. That doesn’t mean you have to leave it some defunct relic; imagine all the fun you’ll have reimagining that milk door as a quaint mailbox.
4. Because you’re a DIY buff
DIY buffs are always looking to take on new challenges, and fixing up a house is the granddaddy of challenges. Rest assured, your sweat equity will buy you bragging rights—is there anything sweeter than hearing a compliment on your kitchen and being able to say, “Thanks, I did it myself”?
Just make sure you’re realistic about what you can safely do, and contract out the rest.
“I wouldn’t do my own electrical work,” says Bawden. “Making a mistake there could be deadly.”
It’s worth it to hire an engineer to help figure out which walls can be safely removed, or a plumber to do work you’re not licensed or experienced enough to try yourself. Remember, even if you’re not doing the remodel with your own bare hands, overseeing such a project is still work.
5. Because you want to flip a house for profit
If you really catch the fixer-upper bug, you could start flipping houses as a business. RealtyTrac reported an average gross flipping profit of $62,624 per home in 2016—that’s some serious money. But despite what TV would have you believe, house flipping is a skill that takes time (and often money) to hone. Whether you actually make a profit depends on how good you are at assessing what kind of work a house needs and doing that work at or under budget.
“You can make some really good money if you’re good at it, but be prepared not to at first,” says Bawden. “It’s not for the faint of heart.”
Last year, 12% of flips sold at break-even or a loss after all expenses.
6. Because fixer-uppers are an adventure
Let’s face it, fixer-uppers are a reality TV show fodder for good reason.
“It’s a lot of fun,” says Bawden. “It’s very creative and tangible, and it’s exciting to see a project come together. I’ve been doing it for 35 years, and I still get excited, and so do my customers. It’s an adventure.”