Should I Buy a Fully Updated Home? Or a “Fixer Upper”?
Hi again, Thanks for reading, as always.
I recently polled some of my Instagram (@ihearttheatx) followers and thought I’d respond to this frequently asked question: “Should I spend more for a fully updated house or should I spend a little less and do the updates myself?”
Fully loaded question – huh? Well, to put it simply, I’m going to say this is all about preference! I know – not really a clear-cut answer. But, in reality, there are pros and cons to both. Let’s start with a fully updated home…
Now, when I say fully updated I do not mean new construction aka brand new aka never been lived in home. Instead, I’m talking about a home the previous seller’s remodeled themselves (or with the help of professionals). They chose the new features, dealt with the contractors, etc. Let’s dig into the pros and cons:
Remodeled Home Pros:
- Move-in ready!
- Lower maintenance. There will be less to “fix” right after move-in (hopefully)
- New design elements and technology (trendy colors and tiles, newer systems, smart home features, thermostats, etc)
- Note: this may not be the case for all fully updated homes. It depends on if the systems were updated as well.
Remodeled Home Cons:
- Higher price point usually in neighborhood and especially for the square footage (Fully updated homes are typically priced above average for the area)
- Longer ROI. Basically, it will take longer for you to see a return on your investment when you buy “at the top” of the market/area
- Little customization. Since the previous owners completed the updates you will have no say in the design elements. And, since you paid for these updates in the purchase price it is likely something you won’t want to change right away – if ever.
- Possibility of poor workmanship. Seeing as you didn’t do the updates yourself and you didn’t hire the contractor you could see poor work that leads to bigger issues down the road, and sometimes these items are missed during an inspection or work at the time, but have a short life span.
Fixer-uppers also have their fair share of positives and negatives.
What can you look forward to when you buy a fixer-upper? Here’s a look:
Resale Homes that Need Updating Pros:
- Discounted price. You will see lower asking prices for these homes because they require work immediately (though in the Austin market, they are still very much desired)
- Design. Since you’ll be the one making the updates, you’ll have the freedom to choose the design features you want.
- May purchase at a lower price point for the nieghborhood/area/size
- Lots of work. Fixer-uppers require a lot of work! You’ll have to research contractors and deal with the contractor. Plus, to save even more money, some new owners decide to do some of the work themselves.
- Extra time. The remodeling process takes time. Know that you might not be able to move in for months.
- Surprises. Things will come up during a remodel. Be prepared for the possibility of the remodel to cost more money or take more time than the contractor first expected.
- Competition-cash investors may be your competition and you may still pay over list price
- Lender restrictions–remember if you are financing a home that needs work, if it is very obvious, the lender may not lend on it.
So, as I said, it’s all a matter of what you would rather do. It’s your call and preference, but be sure to do your due diligence.
My favorite way to build equity:
- Buy a home that isn’t the most expensive in the area, but isn’t the most dilapidated either.
- Live in your home for a while, learn what are the major deal-breakers and items you care about the most.
- Any major work you can afford-do prior to moving in (right after you close) For example: new floors, popcorn ceilings, etc.
- Sometimes the bigger ticket items (though not the prettiest) add the most value: Roof, HVAC, hot water heater, plumbing, electrical, window upgrades etc.
- Make small updates while you live in the home that benefit you and create value (example: built ins in the closet, new windows, pergola or patio because you enjoy the outdoors, paint, fixture changes).
- Remember sometimes Small items go a long way in homes!
To hear about my remodeling experience of my last home’s kitchen-See more HERE.
Here’s a video recap of basically what I told you above.
Have questions? Reach out to me or a member of my team: BrinkmanTeam@realtyaustin.com. We are always available to answer your questions!
For additional real estate tips, visit my YouTube channel.