The demand for homes is on the rise despite the increasing prices. Some potential home buyers postpone home buying, hoping that prices may decrease.
However, it doesn’t look like that will happen any time soon. The housing market has been having a steady surge in price since 2020. Experts are expecting it to be higher in the coming years.
The process of finding your ideal home can be a tedious task. You will have to make serious decisions from the location of the property to the type of home you will buy, price, etc. Part of the decision-making will be what to buy between a move-in-ready and a fixer-upper home.
For this reason, some buyers are considering other affordable options for homeownership. One of which is purchasing fixer-upper homes.
This article will explain the pros and cons of each option. Careful consideration of the merits and demerits of both options will guide you to make the appropriate choice.
Pros of buying a fixer-upper
1. You will grow equity fast
Fixer-upper properties initially have a lower value. However, the value surges after you complete the renovation project. You build more equity on the home as the value increases.
It also means that you can purchase a fixer-upper house below the market value, upgrade it, and turn it around to sell it for more profit. Fixer-upper homes offer an opportunity to earn more returns if you are into house flipping.
2. The taxes are cheaper
The taxes you pay on properties depend on their purchase price. Since fixer-upper homes are less expensive, your property taxes will be lower.
You can also receive tax credits for the energy-efficient upgrade or eco-friendly feature you add to the house. If you decide to sell the property, you will pay less on capital gains because of the renovation.
3. Fixer-upper homes are affordable
The purchase price of a fixer-upper house is lower than move-in-ready properties of similar size and floor plan.
However, you will need to conduct some upgrades before the fixer-upper home becomes habitable. It is advisable to calculate the renovation cost before settling for a fixer-upper property. That is the only way to be sure if that house is cheaper.
4. Opportunity to customize the home
Most fixer-upper houses are blank slates that allow you the opportunity to remodel them into your dream home. You can design fixer-uppers to reflect your lifestyle and taste. You also have the freedom to choose your finishes and style the way you want.
However, this depends on your budget and the creativity of your contractor.
Cons of fixer-upper homes
1. The renovation can be tedious
The renovation process for a fixer-upper home is stressful and time-consuming. On average, it can span between four to eight months. That means you will look for temporary accommodation within this period.
The renovation process will require hiring contractors and subcontractors. If you intend to do it yourself, you need to give it your time and attention.
2. They may pose some risks
When buying a fixer-upper home, you can never be sure of the issues with the property. There may be hidden problems like a poor electrical system, water damage, foundation issues, etc. Some of these issues may not be apparent during a home inspection.
As a result, the cost of repairs may be higher than your budget.
3. Challenging to finance
Buying a fixer-upper home may be challenging if you intend to get money from lenders. Lenders do not give loans to purchase fixer-uppers because of the risk involved. You need to save up some money, get a rehab loan, or look into hard money lenders. The last two options are more expensive.
Pros of move-in-ready homes
1. Ready to use
Just as the name implies, you can move into the home immediately after completing the home buying process. Even when you want to make a few changes like painting or lighting, you can start living in the house. The only hassle you will face here is moving and unpacking your boxes.
2. Easy to budget
It is easy to budget for move-in-ready homes because you already know the cost, and you do not expect additional expenses on remodeling.
3. Financing is not a problem
Once you meet the usual requirements, getting loans to purchase a move-in-ready home is straightforward.
Cons of move-in-ready homes
1. The purchase price
The prices of move-in-ready houses are higher than fixer-uppers.
2. Customization
Move-in-ready homes may not be what you want. That is because the entire design is according to someone else’s taste. You will not want to spend additional money on renovation after paying so much to purchase the home.
The bottom line
Whether getting a fixer-upper or a move-in-ready home, it all depends on your priorities and lifestyle. If you do not have time but can afford a turnkey property, you can go for a move-in-ready home.
However, a fixer-upper home may be appropriate if you want a personalized house and have enough time.
