In today’s housing market, many prospective homeowners find themselves caught between soaring prices and the desire to own their dream home. For those willing to roll up their sleeves and embrace a challenge, fixer-upper properties present an intriguing alternative to move-in-ready homes. These properties, which require various degrees of renovation, often come with lower price tags and the potential for significant equity growth through improvements.

Takeaways New Hide ▲

Fixer-upper demand drops

buyers now prefer

move-in-ready homes

Renovating costs more

and takes longer

than many buyers expect

Updated homes sell faster

and fetch higher prices

than unrenovated properties

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The journey of transforming a fixer-upper into a dream home isn’t always straightforward, but it can be incredibly rewarding. We came across homeowner Ashley Basnight’s (@smashingdiy) fixer-upper renovation, which she remarked took her three years to complete with all of life’s happenings happening to her (work, new marriage, etc). Her experience highlights an important reality: renovations often take longer than expected as they compete with the demands of everyday life.

While the prospect of buying a property that needs work might seem daunting, understanding the potential benefits and challenges can help you make an informed decision. Below, we explore the pros and cons of purchasing a fixer-upper to help you determine if this path to homeownership aligns with your goals, budget, and lifestyle.

@smashingdiy

These home renovations just get better with time! #interiordesign #homeimprovement #fixerupper

♬ original sound – (the real)sejoyss❤ – (the real)sejoyss❤

Pros of Buying a Fixer-Upper:

Lower Purchase Price

The most obvious advantage of buying a fixer-upper is the reduced initial investment. Homes needing renovation typically sell for significantly less than comparable move-in-ready properties in the same neighborhood. This lower entry point can make homeownership accessible in desirable areas that might otherwise be out of your price range.

Potential for Equity Building

When done right, renovations can substantially increase a property’s value. This “forced appreciation” allows homeowners to build equity faster than they might through market appreciation alone. Strategic improvements to kitchens, bathrooms, and overall floor plans often yield the highest returns on investment.

Customization Opportunities

A fixer-upper provides a blank canvas for creating exactly what you want. Rather than compromising on someone else’s design choices, you can customize the home to suit your specific preferences, needs, and style. This personalization can result in a deeper connection to your home and greater long-term satisfaction.

Potential Tax Benefits

Depending on your location, there may be tax incentives available for renovating older homes or improving energy efficiency. Additionally, if you eventually sell the renovated property for a profit, you may benefit from favorable capital gains tax treatment on your investment.

Cons of Buying a Fixer-Upper:

Time-Intensive Process

As evidenced by Ashley Basnight’s three-year renovation journey, transforming a fixer-upper requires a significant time commitment. Between planning, securing permits, coordinating contractors, and potentially doing some work yourself, renovations can extend far beyond initial timelines, especially when balanced with other life responsibilities.

Budget Uncertainties

Even with careful planning and professional inspections, renovation projects frequently uncover unexpected issues once work begins. These surprises—from hidden water damage to outdated electrical systems—can quickly inflate your budget. Experts recommend setting aside a contingency fund of at least 15-20% above your estimated renovation costs.

Living Conditions During Renovation

Depending on the extent of renovations needed, you may face difficult living conditions during the process. Some homeowners find themselves without functioning kitchens or bathrooms for extended periods, while others need alternative accommodations entirely, adding another layer of cost and complexity to the project.

Renovation Stress

The renovation process can be emotionally taxing. Making countless decisions, managing contractors, dealing with delays, and watching budgets grow can strain even the most patient individuals. For couples, renovation stress can sometimes lead to relationship tension as disagreements about priorities and aesthetics arise.

Is a Fixer-Upper Right for You?

Before taking the plunge on a property needing significant work, honestly assess your tolerance for uncertainty, financial flexibility, and time availability. Those with realistic expectations, sufficient contingency funds, and patience for the process are most likely to find success and satisfaction in the fixer-upper journey.

Remember that not all fixer-uppers are created equal. Some may need primarily cosmetic updates, while others require major structural renovations. Having the property thoroughly inspected by professionals can help you understand exactly what you’re getting into before making a commitment.