Pros and cons of buying a “fixer-upper” home

Buying a home is an expensive purchase. And while you could go with a “fixer-upper,” rehabbing a home is not an easy feat. Kevin Kalligher of RE/MAX results weighs the pros and cons.

Kevin: “The extent to which a home needs fixing is a case by case scenario and can vary greatly. They can range from just needing to update the cosmetics of the property, like changing the paint color, updating light fixtures, adding new flooring, and sometimes even just a deep clean does wonders. It goes all the way to a house that needs some substantial structural repairs like a foundation, roof replacement, new plumbing or HVAC, windows, new subfloor, reframing studs in the house and knocking down walls.

“The idea is that when you purchase the home you’re going to add equity into it in the form of making repairs to increase its value.

“For example if you were to purchase a home for $100k and know that move-in ready homes are selling for $200k you have plenty of runway to make repairs to get it up to fair market value. Let’s say it only needs $40k worth of work, you have essentially built in $60k worth of equity into your home.”

He tells us that a lot of it comes down to your handiness and time.

Pros:

1. You can build equity
2. You’re very handy or an experienced contractor
3. You have the time to go slow and learn

Cons:

1. It can take a lot of time.
2. Rehabs can cost a lot upfront
3. There can be surprises on the way
4. It’s not for everyone

In conclusion, Kevin tells us, “Be careful. Go over and breakdown all of the costs associated and budget for the worst case scenario. Ultimately, it’s a great return on investment and a great way to build wealth.”