Is Buying A Fixer-Upper A Smart Financial Move?

August 22, 2019

Dreamstime

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A home fixer-upper is a diamond in the ruff.  They're so popular that there are several TV and web shows devoted to nothing home renovations and the deal you get purchasing a handyman's special. But when you crunch the numbers, fixer-uppers are a savings goldmine as you would think. A recent survey found that after renovations, turnkey houses actually cost just about the same as a fixer-upper. On average, owners paid $250,000 for move-in ready homes, while those who renovated fixer-uppers spent an average of $247,000. And if renovations went over budget, turnkey houses could cost significantly less. Fixer-upper homeowners that went over budget spent an average of $275,741. Of course, not all home renovations are created equal. A home renovation is much more likely to come in under budget, and be much less expensive overall, if no structural changes are needed. Building an addition, knocking down walls, moving plumbing, and other structural changes come with a host of potential issues, as well as a higher bill. Houses don’t come with a full history, so you might encounter expensive surprises like water damage, mold, or insects during structural renovations. If you want to keep a renovation under budget, look for houses that only need cosmetic changes, like new cabinets and countertops. When considering a fixer-upper, look for warning signs that your optimistic renovations might turn into a money pit. Check for a sagging roof, cracked foundation, a fuse panel instead of a modern circuit breaker, and significantly sloping floors all of which could dramatically spike your budget, turning your bargain fixer-upper into a burden. This isn't to say you should never contemplate a fixer-upper. Just don’t assume that you’ll save money in the process.

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SOURCE: Better Homes & Gardens

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