As we enter the prime home selling season of 2023, a case could be made that this may be a very good time to consider purchasing a fixer upper as your next home. And by "fixer upper" were talking about a home that can be comfortably lived in with little or no changes, but is devalued because of outdated decor and, possibly, appliances. The reasons you may want to look at a fixer upper in 2023 as follows:
- You can get into a neighborhood that otherwise would be unaffordable;
- Even though interest rates are high relative to the last 10 years, the lower price of a fixer upper will reduce the overall interest payments; then, when interest rates drop back down, you can refinance the improved property;
- Prices on renovation supplies, such as plywood and lumber, have dropped significantly;
- The cosmetic changes you can do yourself, such as painting and landscaping, often make the biggest change in the appearance of the home at a low price. More expensive changes, such as flooring and countertops, can be delayed;
- With the aid of online resources, many renovations, such as flooring, can be done by a homeowner.
Other advantages of buying a fixer upper include:
- Opportunity to build equity: By investing time and money into a fixer-upper, you have the potential to build equity in the home and increase its value over time.
- Customization: When you buy a fixer-upper, you have the opportunity to customize the home to your liking. This can include choosing finishes, updating the layout, or adding additional rooms or features.
- Learning new skills: When you buy a fixer-upper, you have the opportunity to learn new skills and gain experience in home renovation and repair. This can be a valuable skill set that you can use in future home purchases or even turn into a side business.
- Sense of accomplishment: There's a great sense of accomplishment that comes with taking a rundown property and turning it into a beautiful home. If you enjoy DIY projects and taking on a challenge, a fixer-upper can be a rewarding experience.
Of course, there are a number of disadvantages as well:
- Time and effort: Renovating a fixer-upper requires a significant amount of time and effort, even for experienced DIYers. Depending on the scope of the renovations, you may need to take time off work or hire contractors to help with the project.
- Stress: Renovating a fixer-upper can be a stressful experience, particularly if you're living in the home while the work is being done. The constant noise and disruption can take a toll on your mental health and may impact your daily life.
- Financing challenges: Obtaining financing for a fixer-upper can be more challenging than financing for a move-in ready home. Depending on the extent of the renovations, you may need to take out a renovation loan or pay for the upgrades out of pocket.
Overall, buying a fixer-upper can be a good investment for those who are willing to put in the time, effort, and money to renovate the property. However, it's important to carefully evaluate the potential downsides before making a purchase and to have a solid plan in place for the renovation process.