fixer upper

Should You Buy A Fixer Upper?

I’m buying my third house! But this time, I’m doing something a bit different (and kind of scary!). Instead of buying a completely updated ready to live in home, I’m going to buy a fixer upper!

Why Would I Want to Buy a Fixer Upper?

I decided to buy a fixer upper because I don’t want another mortgage. The mortgage on my investment property (my former primary residence) is a little over $1200 a month, and I don’t want another huge bill on top of that. It’s important to know you can afford the mortgage on an investment property if you need to! But also, (and perhaps this is insanely idealistic of me), I wanted to learn some DIY skills! Isn’t it the dream to buy a run down old home and fix it up to your liking? Doesn’t that sound wonderful? It does to me! 

Is It Worth it to Buy A Fixer Upper?

The biggest question on everyone’s mind is whether buying a fixer upper is worth it or not. And of course, as with all things, that depends. There are tons of financial perks to it (if there isn’t too much wrong), but there are downsides a well. 

The Financial Perks of Buying a Fixer Upper

Buying a fixer upper can be a great financial decision. In our new market, property values aren’t very high to begin with, so you can find an amazing house for a super low price if don’t mind doing some work. We are buying a giant 4-bedroom Victorian style home for just over $50K! You can’t get that kind of deal in most areas (though to be fair, no one really wants to buy a house in this area). Buying a fixer upper in inflated real estate markets can also be a great idea. You can get a house with great potential for an amazing bargain! It’s definitely a great way to get the type of house you want without having to pay top dollar.

The Costs of Buying a Fixer Upper

Nothing is without its downsides. The biggest issue with buying a fixer upper is that you actually have to fix it up! You can either hire contractors to make the needed renovations, which can get crazy expensive, or you can opt to do most of the work yourself.

When I bought the house,I thought I could fix most of the problems myself. Sure, I’d have to hire a professional for anything that is potentially dangerous or could cause bigger problems, but the majority of the fixes seemed pretty easy. If you’re going to buy a fixer upper, it’s important to know what you can fix on your own, and what you will need a professional for. It’s also important to pay attention to things that can either make or break your investment. These things will help you determine how much money you will need to put into it. 

Things You Need to Consider Before Buying a Fixer Upper

There are tons of things that you need to take into consideration before you take the plunge and buy a fixer upper. The most important things are the potential resale value, the potential rental income (if you’re into that) and the things you want out of a home. 

Resale Value

Before you buy a fixer upper, you need to look at the cost of renovation versus the potential resale value of the home. The housing market in Central Pennsylvania is not good. There aren’t a lot of nice homes on the market, and the ones available don’t sell for more than $115k. If we can stick to a renovation budget of $30K, we might be able to make an additional $30K when we eventually sell it. Because of these tight margins, we have to be very careful about the amount of money we put into it. We don’t want to put so much money in that we can’t recoup it when we do eventually sell.

 

buying a fixer upper

 

Potential Rent

Some people buy fixer uppers with the intent to fix them then rent them out. This is a great option for building your real estate investment portfolio. However, you do need to make sure that the rental market in your area is worth the hassle. Do you want to do all that work to fix up a house to make a net of $100 per month? Probably not. Look at all of your costs (purchase price, potential mortgage payment, and renovation costs) and compare those to the potential monthly rental income to get an idea of whether this would be a good option. It could work really well in some markets, but could be a money pit in others.

What You Want

Although the money parts (resale or rent) are important considerations, they not the only considerations. I plan on living in this house for a long time (and hey, maybe property values will increase some day!) so I want to make it my own. I don’t want to get too crazy with the renovation costs, but I also want to build a home that works for my needs (a great thing about a fixer upper is that I have the ability to do that!). The goal is to make the house a home.

If you are buying a fixer upper with the intent to live in it, deciding on what you want is the most important part. If you plan on living there for a long time, making it your own is more important than the resale value or potential rent.

What Was Your Experience with Buying a Fixer Upper?

Have you every considered buying a fixer upper? How did it turn out? I’d love to hear all about it in the comments!

Love this post? Share it!

6 thoughts on “Should You Buy A Fixer Upper?”

    1. That’s the number one reason I left California! You can’t even buy an empty lot for 50K! It’s insane out there.

  1. Keep us up to date! I am thinking of buying my own place in the next year or so that i can technically live in but also fix up myself and then rent out. Save on my own living costs while I am there so I am not losing money while I do it up. Thanks for posting!

    1. We are considering renting it out someday. It’s great that we won’t have to pay a mortgage while fixing it, definitely a great way to save some money! Let me know if you decide to go for it, we will be posting our fixing journey on youtube so you can learn from our fails!

  2. Pingback: Geoarbitrage: Should You Move to Save Money? - Partners in Fire

  3. Pingback: DIY: Remodeling the Bathroom - The Good, Bad, & Ugly - Partners in Fire

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: