The Pros and Cons of Buying a Fully Renovated Home vs. a Fixer Upper

Fixer Upper or Fully Renovated Home

Are you in the market for a new home but torn between purchasing a fully renovated home or a fixer upper? It's a common dilemma for many homebuyers, and there's no one-size-fits-all answer. Both options come with their own set of advantages and considerations. In this blog post, we'll explore the pros and cons of each to help you make an informed decision.

Fully Renovated Home

Purchasing a fully renovated home can be incredibly appealing. After all, who wouldn't want to move into a space that's already been updated and modernized? Here are some reasons why buying a fully renovated home might be the right choice for you:

1. Move-In Ready: One of the most significant advantages of buying a fully renovated home is that you can move in right away. There's no need to worry about undertaking any major renovations or repairs before settling in.

2. Time and Effort Saved: Renovating a home can be a lengthy and stressful process. By purchasing a fully renovated property, you save yourself the time, effort, and headache of managing a renovation project.

3. Predictable Costs: With a fully renovated home, you know exactly how much you're paying upfront. There are no surprises or unexpected expenses lurking beneath the surface.

4. Less Hassle: A ready to move home can mean that you do not need to make any interim arrangement when moving from a rental accommodation / former home to the new place.  This could mean no additional payment towards rent or mortgage or having to make alternate arrangements to store your goods for the period of renovation or having to deal with tradespeople or contractors.

5. Simpler Financing: You could get a mortgage right away to finance the purchase and not need additional funds to carry out the renovation.   
   

However, it's essential to consider the potential drawbacks of buying a fully renovated home as well:

1. Higher Price Tag: The convenience of a fully renovated home often comes with a higher price tag. You may end up paying more for the property compared to a fixer upper and there is little potential for increasing the value.

2. Limited Customization: While the renovations may be well done, they may not necessarily align with your personal style or preferences. You may have to compromise on certain design elements.

3. Missed opportunity: For aspiring real estate investors, renovating their home can be a good training experience before tackling similar or bigger projects.  Buying a fully renovated home will be a missed opportunity if you have any such aspirations.

Fixer Upper

On the other hand, purchasing a fixer upper can be an excellent option for buyers who are willing to put in the time and effort to create their dream home. Here are some reasons why buying a fixer upper might be worth considering:

1. Potential for Equity: Fixer uppers are typically priced lower than fully renovated homes, allowing you to potentially build equity by investing in renovations and improvements.  Such properties also tend to have lesser interest from majority of the buyers and so there is an opportunity to buy below the market (hence “Money in the Buy”).

2. Customization Opportunities: Buying a fixer upper gives you the opportunity to personalize the space according to your tastes and preferences. You have full control over the design and renovation process.

3. Investment Potential: With the right renovations, a fixer upper can significantly increase in value as compared to the $ spent renovating and thereby providing you with a good return on your investment.

However, there are also challenges associated with buying a fixer upper:

1. Time and Labor Intensive: Renovating a fixer upper requires a considerable amount of time, effort, and expertise. You'll need to be prepared to manage a renovation project, which can be overwhelming for some buyers.

2. Unforeseen Costs: When renovating a fixer upper, unexpected issues may arise, leading to additional expenses. It's essential to budget for contingencies to avoid financial strain.

3. Complex Financing: You will either need additional funds or have access some kind of short-term financing to carry out the renovation.  Ideally, you will need to purchase via a short-term mortgage so that you can refinance the property once renovated for enhanced financial efficiency.

4. Value destruction potential: If you are not savvy about the improvements to be made then it can result in value creation lagging behind $ spent (hence not profitable). Also, if cost and time of the renovation is not kept in control then you could end up with cost overruns, increased financing costs, etc.
   

In conclusion, whether you should buy a fully renovated home or a fixer upper ultimately depends on your individual preferences, abilities, risk appetite, budget, and willingness to undertake renovation projects. Consider carefully weighing the pros and cons of each option before making your decision. Regardless of which path you choose, remember that with the right approach, you can create a home that perfectly suits your needs and lifestyle.