So, who is right? The answer depends on the situation.
There are three main times when it makes sense to purchase a fixer upper.
Houses with Simple Upgrades
There is a big difference between a house that needs to be completely gutted and started from scratch and one that needs some upgrading. Many times there are houses on the market that buyers consider a “fixer upper” simply because it is outdated. That means that the major areas of the house, such as foundation, roofing, plumbing, electrical, and HVAC are in good working condition.
Houses like this are easier for the average joe to fix up.
Finds like these are able to be updated with things like fresh paint, new light fixtures, and new hardware on the cabinets. You could replace the kitchen countertops with granite or add marble tile in the bathroom.
There are many buyers that are unwilling to buy a house that needs to be updated before they move in, so you can often find a good deal on outdated homes.
When it Makes Financial Sense
Before you purchase a fixer upper you need to make sure that the numbers add up. It does not make any sense to purchase a house and then invest so much into the house to get it the way that you like it that you end up owing more than the house is actually worth.
Fixer uppers are great deals when you are able to purchase the house, make the repairs, and still have equity in the house. If you want to keep living in your house it is nice to have equity in it. If you want to sell the house once you have completed the work you need to have room to make money on the sale.
When the Timing Works
If you are six-months pregnant and trying to buy and move into a house before the baby is born, a fixer upper is not the way you should go. The work that a fixer upper requires is often work that needs to be completed under permits and checked by inspectors. This process can take time.
You also want to make sure that if you are hiring a contractor to do the work that they have time available to complete the work you need done. Remember that most jobs take longer to finish than what the initial estimate claimed.
Buying a fixer upper can be a great way to get a deal on a house and be able to put your own stamp on it before moving in. It can also be a great way to step into the world of real estate investment. However, remember that there are some times when it does not make sense to purchase a fixer upper. Make sure that the house is a good fit for you at the moment.