Should you buy a fixer-upper?

Fixer-upper (noun). A home you purchase at a reasonable price, but one that requires an unreasonable amount of money in repairs and renovations.

Okay, so I made up that definition, and it's not always true. Buying fixer-uppers can get you more house than you would normally be able to afford at a reasonable price. They can be pleasantly inexpensive. But they can also be money pits, masquerading behind a façade of charming woodwork and arched doorways.

As tempting as the purchase price is for houses that need a little TLC, you must assess whether a fixer-upper is right for you. To do that, you need an appraisal. And I'm not just talking about the house.

An Honest Appraisal of Yourself

I believe even a carefully selected fixer-upper is really only a bargain if you can do the labor yourself. Even though we come from a long line of blue-collar workers, we have a lot to learn. Still, we have people to ask. Between our two families, we have two HVAC technicians, a plumber, an electrician, two ex-carpenters, a concrete worker, and two RNs (just in case the renovations don't go smoothly).

It's more than knowing how to do repairs, though. Even if you can do most of the labor yourself, do you want to? For instance, my husband loves doing electrical work, but doesn't enjoy carpentry. That means our windows remained untrimmed for long time, but I'm not shocked that we have a great fuse box.

Then there's living in the middle of endless projects. Since we renovate after our day jobs, sometimes we live in the middle of projects for a long time. When we refinished our wood floors on the main level, I was this close to going crazy. There was dust everywhere, for too long.

And are you equipped with the necessary tools? Even though we have the main tools like hammers and drills, we also share the really expensive or less commonly used tools between family members. Tools are expensive. You may want to borrow or rent tools that you won't use as often.

The Other Honest Appraisal

As much as possible, you need to know everything about the house. A home appraisal and a thorough home inspection should tell you what you need to know. What's it worth? If it's an old house (and most fixer uppers are), how is the foundation? How old is the plumbing and wiring? Is there evidence of mold or water damage? Does it need a new roof?

Once you know what it needs, you need to ask whether you can afford to fix these things. Unless the house is dirt cheap, or you have access to inexpensive materials, you may need to find another house. Issues like mold or a foundation in disrepair are expensive to fix, so you may or may not get your money back in home equity.

A Tale of Two Houses

We've owned two homes. And while both needed a lot of work, they were completely different.

So what was the difference? The first house sat on the edge of a town with notoriously low prices for real estate. It was a mediocre house in a mediocre neighborhood. Because of that, we needed to buy the house at a price lower than the surrounding houses. Which brings me to rule #1…

Rule #1: Buy a fixer-upper at a cost (way) below the rest of the houses in a good neighborhood. By following this rule, your improvements will bring your house up to (or slightly exceed) the value of the surrounding properties. You won't recoup your costs if your renovations result in “too much house” for the neighborhood.

Rule #2. Find a fixer-upper with quality construction. That first house was cheap, costing less than our combined annual income at the time. But everything about it was cheap, including the materials used in its construction. And that led to a rodent infestation, among other things. (I think our record was catching 14 mice in a 24-hour period.)

On the other hand, our second house has “good bones.” Maybe it needs lots of work, but at least the extra work will be built on a good foundation. Ah, but “lots of work” means mostly major, expensive projects.

Rule #3. Pick a fixer-upper with cosmetic upgrades instead of major, expensive projects. Well, of course! We didn't put lots of money into our first house. Instead of fixing the foundation or updating the kitchen, we did inexpensive things like painting, pulling out old, overgrown bushes, and replacing the carpet.

And the new house? In the five years since we moved in, here are the projects we've completed: refinished all the wood floors (all 1,800 square feet of them); replaced the roof and some windows; rewired the house; renovated the bathroom; fixed the barn roof; replaced the leaking toilets and one of the rotten bathroom floors.

That doesn't even include the projects we had to hire out like replacing part of the barn foundation or putting in a new septic system.

It also doesn't include the projects yet to come. Despite the copious amounts of cash we've poured into this place, it still looks like a fixer-upper on the outside. We're used to the squirrel-gnawed siding and the peeling windows, but we recently got a glimpse of how it looks to others.

This summer, we hosted a shrimp boil on the front lawn with lots of people, including a couple dozen kids. As I walked around the tables handing out cocktail sauce, one 6-year-old said, “Hey, who lives here?”

“I do,” I replied.

“Well, you need to paint this house!”

No, buddy, what we really need is new siding.

Counting the siding, new windows, and a few other things that we really need to do, I estimate that we have another $25,000 of updates to go, before we start the bathroom and kitchen renovations…and that doesn't count the $30,000 we've already spent. According to the last appraisal, the house is worth less now than when we bought it.

Ouch. Next time I'll be following my own advice AND applying this formula: Price of house plus cost of repairs equals the average home price in the neighborhood.

So before you fall in love with a fixer-upper, ask yourself if this is a decision you can live with in.

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amanda
amanda

Holy moly, how we have learned this lesson the hard way. The hard thing is that it is very difficult to view the purchase of your home rationally, like a business transaction, which it is. We finally sold our money pit over the summer, but it was hard- so much of your heart and soul goes into a fixer upper that it is hard to let go. We felt like it was the right choice for our family and bought an affordable new place with adequate space in a safe neighborhood. But, I still miss my old money pit.

William @ Drop Dead Money
William @ Drop Dead Money

You’re right: the emotional component of the entire transaction can be a trap. We easily get in over our heads when we talk ourselves into more than we can do. And after the fact it’s hard to let go of something that has so much of ourselves in it. And along the way we have to fight our emotional desire to over-invest or to over-personalize. Our first home was a fixer upper. We stank at it. 🙂 Rather than put in the hours into a house, we put the hours into our jobs and with the extra money we bought… Read more »

Rya @ bulgarian money blog
Rya @ bulgarian money blog

Ooooooooh, I don’t know. Fixer-uppers? The house we live in – built by my grandfather – is huge. So the taxes and maintenance costs are huge. Heating bills are huge. Roof repairs are expensive because, well, we have a lot of roof! Not to mention cleaning takes forever – with stairs, basements, attic, garden and so on. My point is, buying a big house and fixing it up is NOT A ONE-TIME THING. After the initial costs of fixing, be prepared for high costs of “running” the house. What happens in a couple of years when you have to repaint… Read more »

Catherine
Catherine

Great point. Every house is a fixer-upper. My preferred strategy is buying a house with a good location, a good floor plan, and a good foundation. Currently I live in a house that met all three criteria but had lots of deferred maintenance. It showed horribly which was good for me. Even in one of LA’s hottest home-buying markets, I got it for a good price. Using my $50,000 reno budget, within two months I had replaced the roof, replaced the original plumbing with copper, rewired the entire house, replaced all of the windows with double paned ones, replaced the… Read more »

Jennifer Gwennifer
Jennifer Gwennifer

Wow, amazing story! How did you choose the order of your projects? I take it windows, wiring, and plumbing would come before painting, but did you decide to do smaller projects that you could afford first, or ones that would increase the value of the home more quickly? Also, did you have a general contractor who made suggestions on your timeline, or did you subcontract everything out yourself?

Jane
Jane

I know a couple who bought a major fixer upper for dirt cheap. At the time it was all they could afford. They bought in a city neighborhood that isn’t the greatest (an understatement really) in terms of school district and crime. Since they had no money, they decided to do the work themselves gradually. I haven’t been there for a while, but I remember going a few years after they had moved in. Even then there was still exposed beams (and not of the architectural kind), holes in the ceilings, and nails sticking out of the floor. I can’t… Read more »

Catherine
Catherine

This brings up another good point: don’t buy a fixer upper unless you have a cash reserve to fund at least some of the improvements. Whenever you open walls, you open yourself to a host of unexpected structural, electrical or plumbing problems, many of which take professional help to solve correctly.

my honest answer
my honest answer

I agree that most of the savings come from doing the work yourself, so it depends if it’s something you enjoy.

If not, you’d probably be better getting a weekend job for a year or two (since that’s how long a true fixer-upper realistically takes) and spending all that extra cash on a finished house.

Mom of five
Mom of five

That’s exactly right. You have to know yourself. My husband and I don’t mind doing our own repairs, I think you could say we even enjoy working together on some of them. BUT, My husband and I DETEST yardwork so much that we now factor in the cost of paying someone else to do it for us to the price of any home we’re considering buying. It’s not that we can’t mow our lawn or rake our own leaves, we just really don’t want to.

John S @ Frugal Rules
John S @ Frugal Rules

I think a lot of it comes down to being honest with yourself, like you say. If there are not major repairs needed, but ones that you can tackle (and do yourself) then it very well may be worth it. Plus you can have the satisfaction of getting it all done and having something you like in the end.

TB at BlueCollarWorkman
TB at BlueCollarWorkman

I agree, you’ve got to be honest with yourself. In my case, the house my wife and I bought needed work, but I already do blue collar fix-it stuff as my day job so gutting the bathroom and fixing the furnace and the roofing, putting in a fireplace…I knew I could do it all. And I have! But if you’re not sure you can do it yourself, see what contractor costs are, and you’ll probably find that a fixer upper is a bad plan.

Julie
Julie

Your wife is a lucky lady!

Sun chassr
Sun chassr

Yeag

Rebecca
Rebecca

We had mostly good results with our fixer, but we are handy people and my husband had construction experience. We bought small, old and well-built but not updated since the 40s.
Though most of it went well, I strongly recommend not buying a fixer with only 1 bathroom! Living for 3 weeks without a shower or toilet, in a hotel and then on friends’ couches when the project ran long, was the worst stress we faced from the job.

W at Off-Road Finance
W at Off-Road Finance

Unless you happen to have unusually good repair skills, I think buying a fixer-upper is almost always a bad idea. The hidden costs tend to be very high. Having construction experience and contacts might be enough to tip the decision though.

Do try to find out if there are flippers in the area that have passed on the house. If there are, that may mean you’re underestimating the work or overestimating the equity gain.

getagrip
getagrip

I agree with being honest with yourself, to include understanding rule #1 about pricing yourself out of your own neighborhood. I’ve a neighbor that has done just that, but the decision was either move and upgrade, or upgrade in place. His wife likes the neighborhood and the neighbors so they’ve upgraded to what they want knowing they’ll not honestly recoup if they sell, which isn’t in the plan for some years down the road. The house has expanded to the point it looks like a nice mansion stuffed onto too small a lot, not horrid, just not balanced. Also, just… Read more »

Elizabeth
Elizabeth

I am going to bookmark this post and show it to the next person crazy enough to tell me “with your budget, you could buy a little fixer upper!” Yes, I could, but I won’t have the resources (financial or otherwise) to fix it up! I expect that whatever place I buy will need a little work, but I think the price of home+renovations=market value of home is a good formula to use. Most of the fixer-uppers in my city are in student neighbourhoods. I’ve been through a few of them with people who know the business, and the consensus… Read more »

Maria
Maria

A steep learning curve, for sure! My husband and I, being handy, intellegent people, bought a fixer-upper just as the housing market was about to peak, and spent six years DYI-ing things from floor to ceiling. It was in an area we wanted to be in and about $200K less than the houses where we came from. What a deal, right? WRONG! We both earned good incomes when we bought but within 2 years the housing market crashed, contractors started closing up shop and, since my clients were mostly contractors and small busines owners, I lost my job. So, when… Read more »

Sheryl
Sheryl

Honestly, I love the idea of a fixer upper but at this point in life my husband and I would not be happy with one. We both work, and neither of us would really enjoy spending the majority of our spare time renovating.

If I were in the market to buy I’d probably be looking at a house I liked the bones of, that I could live in with just a few coats of paint and some deep cleaning for a few years but that gives me the option to do more later.

Kaytee
Kaytee

Speaking as the wife of an ex-carpenter, if you buy a fixer-upper with the expectation that you’ll do the work yourselves, than you’ll live in an unfinished, unfixed up house. Tis a rare carpenter indeed that wants to work all week on other people’s houses, and then come home at night or weekends to work on his/her own house. It just doesn’t happen.

Megan
Megan

Agreed. It’s the case of the cobbler’s kids going barefoot! On that note, I’m curious with what the OP meant by listing the people in her family who have contracting skills. Did you hire them to help out with installing cabinets, etc., or did you want them to stop by after work to do a project? I liked this article, and I think that a fixer-upper might only work if you have the money and resources (time being one of them) to devote to fixing up the place. I have a few relatives who refuse to hire a contractor and… Read more »

Jane
Jane

Ha! Excellent point. One of our good friends is a carpenter. It has taken him about 10 years to redo their house. The length of their remodels is an ongoing joke in our friend circle. His wife doesn’t find it funny in the slightest.

Kristen
Kristen

Maybe his wife should learn to do it herself. The quickest way to get it done, I’ve found, is to jump in and then have hubby help when I get stuck. Since I’m doing most of the grunt labor, it usually works just fine. Otherwise, it might never get done! Hubby is very skilled at these things, and I’m learning…

Jessica
Jessica

According to our inspection, our house needed some routine and some cosmetic repairs. Routine included a few minor electrical repairs with the garage door, as well as replacing the original 35 year old aluminum windows and adding a chimney cap to prevent rainwater from getting in. Six months later, we had to put $6k into basement foundation. Then tree roots have gotten into the sewer many, many times, costing us nearly $2k in 8 years. Had to replace the HVAC $7,200. The windows cost $6400. Had to replace hot water heater $750. Two roof repairs $2k. We also added a… Read more »

LauraElle
LauraElle

Your home inspector should have noticed that the foundation, hot water heater, roof, windows and HVAC would need replacing sooner than later. I don’t think there was any way for him to know about the roots in the sewer, though. By the way, I think we had the same home inspector. Mine “missed” water damage to the subfloor- easily visible from the crawl space-, that the electrical panel was one that had been recalled because it caused a lot of house fires (if our home owner’s insurance had found out we had that panel, they would have dropped us), and… Read more »

Catherine
Catherine

Query — did you ask your home inspector about these clearly visible “problems”? If not, shame on you. In my current house, I did not want to spend an extra $100 on a septic inspection. Boy, was I glad my realtor insisted. The septic was shot and the seller had to install a brand new septic system for $75,000 as part of the sale. I also think hiring a foundation person makes sense if the house is old or on a hillside. With an older house with clay pipes, always assume there are tree roots. I had to learn that… Read more »

Jane
Jane

I’m not sure how the inspector is to blame for this. The windows were visible to both of you, as would be the age of the HVAC and the water heater. The only place he is to blame is with the basement foundation problems. The damage to the roof could have happened once you moved in. Did you get a sewer study done? That is the only thing that would have alerted you to the pipe problems. I think some buyers try to save money by not doing it, but our realtor strongly urged us to. Plus unless they were… Read more »

Patricia
Patricia

I’m a proponent of buying a home warranty. When we put our house on the market, we purchased a warranty which paid $1900 of a $2300 AC repair. The premium was $500, which would only be charged if the buyers picked up the contract. They went with another warranty co. so we didn’t have to pay the premium! We closed on a house last week. The sellers paid for the warranty and were nice enough to add the premium for the pool. After we closed, we found out the pump has a leak. (Which they knew about!) Hopefully, the warranty… Read more »

Jessica
Jessica

When we bought the house, it came with a 1 year home warranty. The warranty didn’t cover any of the problems we had in the first year. When we bought the house, the HVAC was only 5 years old. However, no one told us that it was the cheapest, low life expectancy system and it crapped out at the age of 11 years. Most systems last longer than that.

SavvyFinancialLatina
SavvyFinancialLatina

My parents have gone and are going through the same thing. They bought a fixer upper and have sunk so much money they will never recoup.
I think the most I can in terms of fixer upper are cosmetic renovations: installing wood floors, painting cabinets, and painting walls.

Mrs PoP @plantingourpennies
Mrs PoP @plantingourpennies

We bought (and fixed!) two such places so far. As long ad they had solid bones – ie no structural damage, we were in for it and willing to put the hours in. Untold hours painting, scrubbing, nailing, etc have bought us a long of equity in each of the homes even though we only purchased them a few years ago. While I agree that being honest with yourself is good, it’s also good to be optimistic because it gets you to do things that are hard. And you learn. And finish them. Replacing siding on our place was hard… Read more »

partgypsy
partgypsy

It can work out, but I think it was easier to do this say 10, 15 years ago before the run up of house prices, when some areas of the country or areas of town were undervalued and then became developed. We bought a fixer- upper because that was all we could afford, in the area we wanted. It worked out because my husband genuinely likes working on houses, it is like his hobby (professionally worked as roofer, painter, rehabber). For things he didn’t know, he would hire people and watch and work alongside them to learn more. You have… Read more »

George
George

Great question. Bought my first of now five property investments as a primary home fixer-upper. I view it as an expensive learning experience. Lots of foolish decisions (6 ft jet tub, 2nd bth, high maintenance oven, etc.). In retrospect, I would have prefered to learn from helping others with their houses but maybe the lessons would not have stuck as well. Great lessons learned! The last four houses have had minimal fix up costs. Because I’m borrowing from a bank, it’s a much higher % return that way. Less stress/time too. If I could qualify for an FHA 203k loan,… Read more »

brian
brian

Another excellent post. There’s nothing wrong with buying a fixer-upper, but it can be incredibly difficult to know and understand what you’re really in for until it’s too late. Within a week of moving in to our own fixer-upper, 12 years ago, the city was already breathing down my neck to make improvements the previous owners had neglected. Of course after the closing, and shelling out all the costs associated with purchasing a home, the only resource I had left was elbow grease. I also had the benefit of having grown up in a house WHILE we were building it.… Read more »

Laura
Laura

DH & I are so not DIY types that when we were house-hunting, we didn’t even consider fixer-uppers. For us, living in a house with huge maintenance problems would be the 5th level of hell. We bought a well-constructed 1200 sq. ft. Cape that had had maintenance done over the years but little to no updating, and we had a home inspection so we knew what problems we faced. It wasn’t cheap, but the price wasn’t too bad as it’s small and has only 1 bathroom ($269K – Boston metro area). It has good bones and we’re in the (slow)… Read more »

PB
PB

I think that it is important to remember that if you live in any house for a long period of time, it will become a fixer-upper. We bought our 1883 house in 1987; seven bedrooms, 3 bathrooms, lots of space. It was not in good shape, but we were broke and so just went through and did cosmetic things to make the children feel at home. Then when two of them turned out to be extremely asthmatic several years later (NOT cause and effect), we sent them away for two weeks and basically gutted the downstairs. It then became a… Read more »

Marsha
Marsha

It’s true every house is eventually a fixer-upper. When we bought our house 17 years ago, it was in move-in condition. The roof and furnace were less than 10 years old then, and the kitchen had all new appliances and refaced cabinets. In the years we’ve been here we’ve added central air, replaced the hot water heater twice, replaced the entire HVAC system, painted the exterior twice, replaced appliances, refinished hardwood floors, painted nearly every room, partially remodeled two bathrooms, patched the roof, and the list goes on. And we’ll need to replace the roof within the year. Other than… Read more »

vandemiere
vandemiere

The other thing to consider with a fixer is your actual skill level. Its one thing to have time and the desire to fix things, its another to be able to do the work on a professional enough level that it doesn’t look amateurly done when you go to sell. I realized early on in a cosmetic fixer i owned that my desire to lay tile and HGTV’s assurance that i could does not actually mean i can get tiles on a surface straight, properly spaced and with the correct amount of grout. If the results don’t look professional you’re… Read more »

Megan
Megan

Yes, and I agree especially with your second paragraph. One of my friends moved into a condo where the seller watched too much HGTV and “fixed” a number of things around the unit. My friend – who is actually handy and knows what he’s doing – got them to drop in price drastically because of the work it would take to make it look presentable.

Matt at Healthy N' Wealthy
Matt at Healthy N' Wealthy

I’m glad I read this because HGTV makes everything look so easy haha. It would be nice if they did a show on how NOT to do things you see on their shows.

catherine
catherine

Actually they have two shows: Holmes on Homes and Holmes Inspection. Incredibly helpful and educational shows.

Jeni
Jeni

I bought a real, cheap fixer upper, but not as my primary residence. I bought it with the plan to rent it out to a tenant. It took a couple years to fix up because of 1) Lack of knowledge and 2) City-imposed restrictions that we had to get around. It’s finally rented out last month and we’re seeing a nice $600 / month positive cash flow come in (after all expenses– I don’t have a mortgage on the house). But if I had to do it all again for a house I wanted to live in myself? I don’t… Read more »

victoria
victoria

Thanks for this article, Lisa — I thought it was well-written and I liked how you clearly showed the lessons you learned and gave some good heuristics for people who are going through the homebuying process. I think the only thing I’d add is to the honest appraisal section, and it’s this: What are the other demands on your time? People with plenty of skills and equipment might be in a great position to buy a fixer-upper when their finances are secure and their workload isn’t overwhelming. The same people with a new baby, or with a partner working two… Read more »

mike
mike

Yeah, we fell into the trap as well. I should have known better but at the time we bought even fixer-uppers were commanding a bit of a premium in the area we bought. We sunk about 25k in and realized that even if we sunk another 80k it wasn’t going to make us happy living in that house. So we sold broke even with expenses since the market was still frothy bought a house that was only 3 years old and have been pretty happy since, with no major repair bills, minor little stuff, knock on web page. Of course… Read more »

erica
erica

My spouse and I are currently buying our 2nd ‘fixer-upper’ in NYC. We find them to be a fabulous opportunity if you’re willing to deal with contractors. (Unless you’re a licensed contractor, DIY is prohibited in most NYC apartment buildings.) But, being apartments, we don’t usually have to deal with major structural issues.

Allyson
Allyson

Excellent article!

Caitlin
Caitlin

Great rules! I live in what I consider a fixer upper and I am planning on doing very little of the renovations on my own and will hire contractors but the math still made sense for my condo. The place has not been updated since the 80s so I am planning on entirely redoing the bathroom, the kitchen, and replacing all major appliances including the furnace. Math-wise it made sense because it was the cheapest cost (based on square footage) in the neighborhood I love and, although I know the update would cost between $20k – 30k, the value of… Read more »

Kris
Kris

It is a big question. And it even goes beyond the numbers or ability. You also need to be willing to commit lots of time & lots of patience. Sounds good now. But what about 3 months? Or 6 months? When will it end? Unless you are someone who loves constant tinkering, these are equally important questions.

alcie
alcie

I think the most important thing to think of in terms of buying any house is the tradeoff between money and time. When buying a fixer upper, the additional trade off to consider is how you want to spend your time. I would rather spend a few hours after work every evening working on updating a house than watch that much TV. My sister in law would rather watch movies in the evening, and has no interest in devoting her time after work to working on a house. There’s nothing wrong with either approach, but she was very unhappy when… Read more »

Marie at Family Money Values
Marie at Family Money Values

Dad followed all the rules, but still ended up losing money on a house he bought – in a great neighborhood, below the price of the average house and below the price of average house plus cost of repairs. He worked night after night on it after working his day job all day. He did all the work himself.

Sometimes things bite you beyond your control. He switched to stock market investing after that house!

chacha1
chacha1

My parents are serial fixers, as is my sister. I, however, have only ever lived in rentals and my skills do not (in all honesty) go beyond painting, changing out cabinet hardware, and installing baseboards. DH can change out a faucet or a light fixture, and he’s laid flooring. That combination of skills is, IMO, insufficient to warrant buying a known “fixer-upper,” which pretty much means any pre-existing house. We do expect to have to do some maintenance work. But we don’t expect to buy a residence until we buy the one we’ll retire to. Our conclusion over time has… Read more »

Christa
Christa

Lol on the 2 RNs in the family! When we fixed up our first house, registered nurses on hand would have been nice. I ended up with a nail in my knee, scratches, bruises, you name it.

Jill H.
Jill H.

I bought a fixer upper and am still glad I did, but I had a lot going for me! First was that my dad is a retired building contractor who was able to dig deeper than the official home inspector and tell me with confidence that there wasn’t anything wrong that we couldn’t fix. Next was that Dad and several uncles who worked in the building trades had the time and desire to help with the fixing-up; if I had had to pay market rate for their labor (instead of paying them steak, crabcakes, beer and undying gratitude), the house… Read more »

Mrs.M in MI
Mrs.M in MI

My husband and I just bought a fixer-upper foreclosure for our first home. The price allowed us to buy in a neighborhood we could have otherwise not afforded, to buy a house large enough and that we love enough that we never have to move again, and to have lots of money left over for renovations. We did make sure to have the most thorough house inspection(s) possible, and through that we learned that the problems were cosmetic and insulation-related; nothing electrical or HVAC or foundational or water leaking issues. One bathroom still has the Mamie-pink fixtures and tile from… Read more »

Matt at Healthy N' Wealthy
Matt at Healthy N' Wealthy

I think the emotional aspect of buying a home can cloud our judgment, and there seems to be a popular idea that a home is necessarily a better investment than stocks/bonds/securities. The tax breaks are priced into the purchase price. So when buying a fixer upper, you should simply consider whether the price and work required are financially worth it. Will it at least bring the home up to the price for which you could sell it? You may pay a premium for something you love about a house, but you should always ask the question as to whether or… Read more »

Kelly@Financial-Lessons

The last tip is major. Cosmetic upgrades that will allow you to make the home your own without necessarily having to replace the entire roof or every window frame is something to keep in mind. My friend and her boyfriend just bought a fixer-upper, and although it didn’t look like much, you could tell it was sturdy and would only take small changes to improve its appearance.

Honey Smith
Honey Smith

Haahaa – you’re not SHOCKED by the fact that you have a great FUSE BOX!

Also – yeah, it’s easy to get caught up in the HGTV of it all. I try to balance the hottie Property Brothers/Kitchen Cousins viewing with some Holmes Inspection. That’ll really open your eyes!

thethriftyspendthrift
thethriftyspendthrift

We are in contract for our first place (a co-op) and it needs a little work. We were able to purchase the property at a much lower price than we otherwise would have—we saw very similar properties listed for $20,000-$60,000 more. We are going to try to do as much work as we can ourselves—and as much as our co-op allows us to do. My dad, thankfully, is very handy. Unfortunately, my husband and I are definitely NOT. It’s only a one bedroom, one bathroom property. We figured that we would stay with family while the bathroom is being done,… Read more »

Patrick
Patrick

Thank you for the great article and for the useful comments. You all saved me from making potentially a big mistake.

Jamie
Jamie

I would buy a fixer-upper if I were good at construction and woodworking. They are a good deal only if you can handle the work.

Personally I think they are really risky so I would stay away. Friends who have the skills and risk tolerance necessary to buy a fixer-upper have saved a lot of money by buying a foreclosure in “as-is” condition. It’s just not for me.

Ann
Ann

Even if you think you’re being honest with yourself: –Take the anticipated monetary cost and double it. You will always find “surprises” that need to be fixed, changes in price, or changes in what you want that increase the price. –Take the amount of time you think it will take, double it and increase the increment by one. So if you think a project will take a week, it will really take two months. (From one who is in year 14 of a 1880s Queen Anne fixer upper…we thought it would take a year, so it’ll probably take two decades… Read more »

mrs bkwrm
mrs bkwrm

We paid $6500 for our fixer-upper. We’ll have put at least that much into it by the time we’ve got it habitable. It will also need a roof, siding, and heating/cooling in the next couple of years. It’s in a poor neighborhood, but there isn’t a lot of violent stranger crime or anything like that and there are only two high schools in town to choose from for the kids, anyway, so that’s not a big factor. It may turn out not to have been a great idea, but not having a mortgage was awfully tempting. Time will tell, I… Read more »

Sriraksha Financial Planning Services
Sriraksha Financial Planning Services

Very well written. The percentage allocation to real estate is usually the highest in any investment portfolio. Buying a house costs most people a huge part of their savings hence it pays to be meticulous.

Money Man
Money Man

Buyer Beware! Sometimes in life you need to take a chance and that’s exactly what my GF and I did when we purchased a run down uninhabitable house with the intention of converting into 3 flats. We had a little bit of experience in property renovation / development but nothing to this scale. After doing our due diligence time and time again we still stuffed up pretty much everything. The project ran over time, over budget and almost killed us physically. We worked like dogs through the night, early mornings and all weekend every weekend in order to get the… Read more »

sara
sara

I married a man with a fixer upper he loved. 15 years later it was in nearly the exact same level of repair. Emergencies got fixed, but there still was only subflooring in most rooms, no closet doors, areas with no sheetrock, exposed stuff, etc. Turns out all of the “work” he thought he was doing (12 years to do the wiring?)was just an excuse for avoiding the rest of his life. It never got done and neither did many other things. When I would push the project forward by making my own decisions and hiring people, he would get… Read more »

Josetann
Josetann

There’s another great reason to buy a fixer-upper. If you can pay for it in cash, then what would have been a mortgage payment can now be applied to the repairs. And every $1,000 you spend on the house, is actually going to the house (and not, as is the case in most mortgages, almost entirely going to interest in the early years). Heck, even if you end up spending $50,000 for a $35,000 bump in appraisal value…just the fact you didn’t pay interest just might make up for the difference (not saying that’s a great situation, rather it’s not… Read more »

Matt Ainslie
Matt Ainslie

I completely agree about fixer-uppers. I went through the process myself with a house bought dirt-cheap at sheriff’s sale.

The rule I came up with for house-buying is this:

“Always rank your price-affecting criteria highly in direct proportion to your inability to change them.”

So for example, buy houses based on stuff that’s difficult to change, such as lot size, location, neighbors and school district. Do not buy houses based on stuff that’s easier to change like house condition or landscaping.

Pat in Portland
Pat in Portland

I just bought a 1909 house in Portland. It has a brand new roof, new exterior paint, new sewer pipe, 5 year old gas furnace (recently serviced and cleaned), 5 year old gas water heater, ok electrical panel, and repaired chimney. The inspection was pretty clean with little to no dry rot, dry basement with no leaks/dampness and little deterioration and some double pane metal rim windows to be replaced eventually (not leaking today). The 2 bathrooms are dated, but fully functional as is the 70’s kitchen. Lots of wallpaper to remove along with ugly carpeting over oak and Douglas… Read more »

springfield mo realtors
springfield mo realtors

Leave it to the professionals if you don’t have time and knowledge in fixing things! If you have the right tools and has plenty of time them by all means do it but its not for everyone!

Rose

JCL
JCL

You can do it. But the fundamentals have to make sense. And someone has to be a superior organizer and project manager (great opportunity to use Kanban boards and Agile processes to chunk projects, etc.). Get an honest appraisal, with some estimates, before committing. Triage those projects according to the money you already have secured (beyond the downpayment for mortgage and taxes and insurance, plus the basic tools to do these projects in the first place). Do everything you can yourself – there is a wealth of information online in forums, visual demos on you tube, etc. People are very… Read more »

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