It’s a question many homebuyers ask themselves while they’re out house-hunting. Should you buy a home that’s move-in ready and has all the latest fixtures and updates (or at least ones you can live with); or should you try to save some money and buy a home that needs some fixing up?
These are good questions and the answer you choose will depend on a number of factors, money and desire to do the work being just two of them. But while you may be envisioning yourself happily tearing down walls and replacing floors, home renos are not always the dream you’d thought they’d be. So what are the pros and cons of buying a home that’s in need of TLC?
Of course, the pros that come with fixing up a home can be obvious. The first is that you’ll be adding value to the home, and it can be a lot. If you add on a room, or even revamp a kitchen that’s in dire need of updating, you could add thousands of dollars worth of value onto your home. This isn’t only beneficial when it comes time to sell, but also should you ever need to borrow against your property using vehicles such as home equity loans or HELOCs. These loans are based on the amount of equity you have. So the more you do, the more you’ll likely see back in property gains.
But even more than property value increases, homeowners like to renovate their homes so they can put their own personal stamp on it. Knowing that you picked out that hardwood for the floors, and that the landscaping includes those water features you’ve always dreamed of can be a huge gain for homeowners. And often, something that you can’t put a price tag on. A house is not a home until you’ve made it yours. And buying a fixer-upper is a great way to do that.
But more than just property gains and the customization that can be done, one of the biggest reasons people choose to buy a fixer-upper is because it’s a cheap ticket into the neighbourhood that they want. If you can save $50,000 on the purchase price on a home that you want (in the locale that you want,) and put $25,000 into it to bring it up to par with other homes in the neighbourhood, that’s a great investment! Especially considering that you’ll be where you want, and you’ll likely put much more value into your home than the $25,000 you put into it.
But tread carefully. Home renos are often no joke, and they do have some serious downsides.
The first of those of course, is that you could go over budget. Way over budget. It’s amazing how quickly the cost of home renos can add up; and how few options you’ll have once you’re actually facing the project. You may think that you just want to replace the tile in the downstairs bath. But once you rip it up, you find a rotting sub-floor that needs to be replaced, and electrical or plumbing systems that have been corroded. These are items that you’ll have to fix and, because you couldn’t see them at first glance, may not have budgeted for.
Another major drawback to buying a fixer-upper is that situations can always change, and you could find yourself with a house you hate and can do nothing about. What if you or your spouse loses their job? How would you complete the renos if you were right in the middle of them? And with a home that’s halfway through major projects, you may not be able to sell either. This is by far the biggest possible con to buying any fixer-upper. And it’s the reason why those who have to do so must carefully weigh their current situation, as well as carefully study their near future and make sure that they can complete the renos.
Home renos can be great, but just like everything else, they do have both good and bad sides. Make sure you fully understand what you’re getting yourself into, so that you can determine whether or not buying a home in need of TLC is a good idea for you.
Want to weigh in on the subject? Make sure you check out our Facebook page, where we’re always talking and join the conversation! And if you’re still thinking about home renos, read our next post where we’ll give you some great tips on how to get them done!
