Why a Fixer-Upper Property Can Be a Smart Investment
May 4, 2023
7 min read
A fixer-upper property is a home that requires repairs or renovations before it can be considered move-in ready. For some homebuyers, the opportunity to buy a fixer-upper can be a cost-effective and rewarding way to get their dream home.
10 Factors That Make Fixer-Uppers Attractive to Homebuyers
Fixer-upper properties are homes that require repairs or renovations. While these types of homes may not be move-in ready, they can be an opportunity for some people to buy a property they can turn into their dream homes.
However, buying a fixer-upper also comes with its challenges, such as needing to budget for repairs and having contingency plans. Despite these challenges, many buyers find the result of turning a fixer-upper into their perfect home to be well worth the effort.
1. Budget-Friendly
Properties that require repairs or renovations are often priced lower than homes in good condition. This can help buyers to purchase properties in more sought-after areas or with more living space than they would have been able to afford with a move-in ready home.
Buyers can save money on the purchase price and use those funds to make the necessary repairs and renovations by purchasing a fixer-upper. This purchase can help buyers create the home of their dreams and increase its value over time.
2. Provides Historical Connection
Old houses have a unique charm that sets them apart from new constructions. Not only do they have their distinct character and style, but they also come with a rich history and a sense of connection to the past. Historical value is something that many homeowners find to be one of the most appealing aspects of buying an old house.
For many homeowners, living in an old house is more than just owning a property—it's an opportunity to connect with the past and experience a unique sense of history. Old ones may require more maintenance and repairs, but for many people, the character and charm of an old house are well worth the effort.
3. Customizable
When someone buys a fixer-upper, they can make it their own by customizing it to their tastes and preferences. The advantage of a fixer-upper is that it allows the buyer to personalize the space to their preferences by selecting things like the type of flooring, paint colors, and fixtures. This level of customization is not often possible when buying a move-in ready home.
Furthermore, fixer-upper buyers can change the layout of their houses and make other changes to fit their lifestyles. They can create an open floor plan and add a home office or gym. Also, they can choose energy-efficient appliances and sustainable features such as solar panels or rainwater harvesting to make the home more comfortable and eco-friendly.
4. Offers a Canvas for Imagination
When buying an old house, homeowners can modernize it or keep it as period-appropriate as possible. Some prefer to update the house to fit the 21st century, while others may want to retain its original character.
The key is to find a balance between honoring the home’s history and making it livable for today's standards without making it feel like a museum. The idea is to respect the home's history and the memories attached, but at the same time, make it a place that reflects the personality and lifestyle of the new owners.
Remodeling an old home can be a fun and rewarding process, and it is crucial to remember that as the caretaker, the goal is to preserve it for future generations while making it a comfortable and livable space for yourself and your family.
5. Gives Investment Opportunity
Porch research shows that, on average, fixer-upper homes cost 15% more than similar homes already in move-in condition after accounting for renovation costs.
Fixer-upper properties can also be a great investment opportunity. They often come at a lower price than move-in ready homes, offer a chance to purchase a property at a lower cost, and then increase its value through repairs and renovations.
Buyers can turn a fixer-upper into a valuable asset that can be rented out or sold for a profit by investing time and resources into the property. This process can be a great way for buyers to generate passive income or increase their overall net worth.
Buyers can also take advantage of the property by turning it into their dream home while they live in it, and when they decide to move out, they are free to sell it at a higher value. This can be a win-win situation, as they live in a home that suits their needs and make a profit.
6. Connects You to Different Communities
Owning a historic home comes with many distinctive opportunities and experiences. These homeowners become part of the local community and a virtual community of historic home enthusiasts. They learn about the history of their home and its past inhabitants. They may even uncover that their home was a landmark in its previous life, like an old doctor's office or store.
Additionally, there is a growing online community dedicated to restoring old houses that many homebuyers stumble into. With the help of social media, they can connect with others who share the same passion for preserving historic homes and learn from their experience. They can also find inspiration and support from others who have gone through the process and make friends with others who understand the unique joys and challenges of owning a historic home.
By immersing themselves in these two worlds, they gain a deeper understanding of the local stories and the forgotten memories that have occurred within the walls of their home.
7. It Grants a Sense of Accomplishment
Many people enjoy taking a property that needs work and turning it into something beautiful. Home renovation can be enjoyable for people who love taking on DIY projects or home improvement. The process allows them to unleash their creativity and skills to make the property their own. It also serves as a way to personalize their living space and make it functional to their needs.
Moreover, the renovation process can be quite rewarding as they can see the results of their hard work and the sense of accomplishment of completing the project.
8. Freedom to Choose Location
Some people are willing to purchase a property in poor condition but located in an area they desire to live in. They see the potential in the property and are willing to put in the effort and finances to renovate it, even though it may come with challenges.
The location is the top motivating factor for them; it could be in a desirable area with a good school district, close to work or a city with a vibrant culture, or with a beautiful view or access to nature. For some buyers, it's an opportunity to invest in the property, fix it up and later sell it at a higher price or use it as a rental property.
9. Reduced Taxation
The amount of property tax you owe each year is calculated by multiplying the assessed value of your home by the local property tax rate. Houses that need repairs or renovations typically have a lower assessed value, resulting in lower property taxes. However, once the renovations are over, the property's value increases, and so does the property tax bill.
10. Fewer Competitors
When the real estate market is particularly active, there is a lot of competition among buyers for properties in good condition. On the other hand, the demand for properties that require repairs or renovations is usually lower. As a result, it's often easier and more affordable to purchase a fixer-upper property.
When there's less competition for fixer-upper homes, buyers have more negotiating power and may get a better deal, such as a lower price or favorable terms. It also might lead to a faster buying process as not many buyers are interested.
Unlock the Potential of a Fixer-Upper Property
It's important to note that buying a fixer-upper is not for everyone and can be a lot of work. Before making an offer on a fixer-upper, it's vital to have a realistic idea of the cost and time required to make the necessary repairs and renovations.
A contingency plan is crucial in case the renovation project becomes too costly or takes longer than anticipated. But, by approaching it with the right strategy, a fixer-upper can still be an opportunity to acquire the home of your desires at a budget-friendly cost.
