If you are looking for real estate investment options, you may be considering a fixer-upper.
There are people out there that will tell you it’s always best to save money and buy a house that needs a bit of work because you will make a bigger profit in the long run.
But it’s not quite as simple as that and sometimes, buying a brand new house that is ready to move into right away is the best option.
Before you do anything, you need to consider the reality of buying a fixer-upper and consider some of these pros and cons.
It Can Be Cheaper
The biggest argument for investing in a fixer-upper is that it’s cheaper. However, that isn’t always the case when you consider the overall cost.
While it might be cheaper to buy the house in the first place, you have to pay for all of the work before you can start letting it to tenants. If you know what you are doing and your budget well, you can easily save money.
However, if you are out of your depth and you don’t do a good job of the renovations, it might end up costing more than it would if you had just bought a new build.
It Requires Time
This is the thing that puts a lot of people off. If you buy a fixer-upper, you will probably have to spend at least 6 months to a year working on it before it’s ready for tenants.
Throughout that period, you’re spending money without bringing anything in, and you have to be hands-on during the renovation, so it requires a lot of time.
However, if you look for luxury properties that are ready to move into right away, you don’t need to dedicate anywhere near as much time and you can start earning money right away.
It’s important that you are realistic about how much time you are willing to spend on this investment when making your decision.
You Have Control Over The End Product
If you have a very specific idea of what you want, finding the right house can be tough. But with a fixer-upper, you have a lot more control and you can make all of the changes that you want.
For example, if you want the perfect family home, you can invest money in the kitchen and living spaces. Creating a home to your specifications will make it a lot easier to find tenants once you are finished, as long as you get the design right, of course.
Sustainability Can Be An Issue
When tenants are looking for properties, they often want to know about sustainability and energy costs, which is why it’s a big trend in real estate investment right now.
If you can find a sustainable property with low running costs, it will be a lot easier to find tenants.
The problem is, an older property is less likely to have good insulation and modern building materials, so fixer-uppers tend to be less sustainable. You can always make those upgrades, but that is an added cost that you have to manage and it’s likely to push you over budget.
In some cases, buying a fixer-upper is a good move for investors. However, you should only go for it if you are willing to put time into the renovations and you are confident that you can afford it.
