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The pros and cons of buying a fixer-upper

Remodeling your home can be a wonderful way to build your equity and make a return on your investment, as well as an opportunity to transform your house into your dream home. But it’s also a huge commitment, involving a lot of time, effort, money and patience. In order to make sure you don’t get in over your head, we want you to understand all the factors to consider before buying a ‘fixer upper.’

Thinking of renovating? Find a great cash out rate in minutes.

Do-it-yourself vs. hiring professionals

A big pro in buying a fixer-upper is that it lets you do a bit of work yourself. This can be great if you're handy, but don't let your ego steer the way with this one. Evaluate your true skill level and what you can and cannot do. For instance, start a list of what you are confident in doing, what you must by law have a trade to do, and what you will need some assistance with. This will allow you to plan out your budget and allot time for renovation. Sometimes the DIY aspect of a property can feel like a con if it becomes overwhelming or too costly to employ a professional.

Before you put your house under the hammer, find out about some of the unexpected costs of renovating and how you can avoid them.

Why am I renovating?

construction-plans Are you going to continue living in the house you’re renovating, or are you planning to sell? This could determine how much you want to put in and how much you want your taste to influence the design choices. If you're planning to stay, buying a fixer-upper lets you design the look of your home without having to build a house from scratch. Always wanted bright pink kitchen bench tops? Well have at it. Of course, you may change your mind about what you want in a year, in which case renovating might not have been the best course of action, as now you only have yourself to blame.

Are you planning on selling after renovating? In this case you get to try to turn a profit through your reno. But this big adventure can go sideways if you put too much of your own style into the house. Just because you love those bench tops doesn't mean your buyers will.

Remember if you're planning on living in the house while you renovate it, this can be a big strain, especially when renovating the bathroom. And no one enjoys being woken up at 7 am by tradies.

Thinking of renovating? Find a great cash out rate in minutes.

Budget

A realistic budget throughout your renovation is imperative. Budget well and you can turn a profit, a huge pro in the case of buying a fixer-upper. However, it is possible to over-spend and finish your renovation at a loss, a huge con. When coming up with a budget always leave at least a 10% buffer, though 20% is more ideal. This extra cash could really save you.

Time

A way to save time is to hire a professional crew, but a way to save money is to do it yourself. Managing your time can be a real challenge when approaching a fixer-upper.

Low on time? Get a home loan comparison rate in 30 seconds.

Tax savings

young-couple-calculating-finances Lastly, a big pro. A huge benefit to remodeling your home are the property taxes that are based on the home’s sale price. Your biannual property taxes will likely be less if you buy a fixer-upper as opposed to a new home.

Home buying and renovation, while sometimes overwhelming, can be extremely rewarding. Let Lendi assist you with any questions you may have, to help make your home buying experience successful.

Lendi makes it simpler than ever to finance your renovation.

Tags: property, renovation, diy, new purchase

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COMPARISON RATE WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
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EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
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