Skip to main content

Should You Buy a Fixer-Upper? 3 Things to Consider

Fixer-uppers aren’t for everyone. Ask yourself these 3 questions before you commit.

When it comes to purchasing a home, you naturally want to invest in a place that you’re proud of and can accommodate any changes to your lifestyle (marriage, children) over the next few years. At the same time, it needs to be a place you can afford. To meet these goals, perhaps you’re considering a fixer-upper. After all, HGTV makes it look relatively easy and inexpensive, right?


Before you base a big decision on television magic, consider these three questions:


  • Do you have enough money for the renovations?
  • Can you get a great deal?
  • Do you have the time, inclination and patience to fix up a house?

1. Do you have enough money for renovations?

Remodeling projects are notorious for going over budget, so make sure you price yours out carefully. Even with incredible prices for repairs or remodeling, things could be tight — after all, you’ve just made a down payment and paid closing costs. Consult Remodeling Magazine's 2018 Cost vs. Value report for the average cost of 21 popular remodeling projects in your region.


If the renovation project is small, you could consider using a credit card to fund the effort. You will have to deal with high interest rates, and your interest won’t be tax deductible. You might be able to borrow against your retirement plan, insurance or stock portfolio, but check with your tax advisor first to make sure this is the best solution for your circumstances.


For more significant remodeling or repair projects, consider a home equity line of credit or a renovation loan tied to your mortgage. These types of loans are borrowed against the home’s value after completion of the work, and the interest may be tax deductible. We recommend you consult your tax advisor with any questions.


2. Can you get a great deal?

Whether or not you can get a great deal depends on a few different factors. The first one to consider is the definition of a “great deal.”


Ideally, your fixer-upper should be a home that is pretty much intact. A total disaster where everything requires attention is not a fixer-upper. If you have to pay to practically rebuild the house, it is not a good deal.


Next, you need to look at location. Are you considering an area where housing prices are already low? If so, you can likely get an incredible bargain on a fixer-upper. For example, Mississippi, rel="noopener noreferrer" in general, has a home value of rel="noopener noreferrer" $128,500 while the median home value in Philadelphia, Mississippi, is $108,100. By selecting an area like Philadelphia, you are already potentially saving several thousand dollars. Factor in the additional savings when you purchase a fixer-upper in Philadelphia or similarly priced neighborhoods, and you can definitely get a great deal.


If you look for a fixer-upper in a fast-growing area, you will likely spend more. Realtors can sell homes in fast-growing areas for more than the homes are worth.


3. Do you have the time, inclination & patience to fix up a house?

Here’s where television tries to fool you again. A fixer-upper seems to get fixed up in no time on reality TV. Shows like these fail to convey all the complexities you will encounter.


Fixer-uppers require hard work that leads to sore muscles, more than a few expletives and tests to your patience. If that kind of DIY project isn’t your “thing,” rethink this route. Now, with that said, a renovation project can give you a lot more house for your budget, not to mention a tremendous sense of accomplishment.


So, what do you need to be ready for?


  • Researching and learning new skills. You don’t have to be an expert to tackle certain aspects of remodeling and repairing a home. Do research online. Visit Home Depot or Lowes to get advice or take classes. Watch tutorials on YouTube.
  • Doing the lion’s share of the work. The whole point of purchasing a fixer-upper is to save money. If you hire an expensive crew to do the job, you may as well have just bought a move-in ready home.
  • Managing contractors. You may not be able to do some jobs such as plumbing or electrical work. You need to be ready to manage contractors. This renovation is a project, and you are the project manager. If you do end up hiring a contractor, make sure you do thorough background research.
  • Minding the budget. Every project manager must also ensure the project gets completed within the budget. Not exactly fun, but it is necessary.
  • Dealing with delays. Unless you are the luckiest DIYer to ever buy a fixer-upper, you will deal with setbacks. Materials may not arrive on time. Something may break. You may need to get a permit if you are doing any structural changes. Prepare to devote some time to keeping things on schedule, because significant delays may mean greater costs.

Buying a fixer-upper: Is it for you?

While fixer-uppers can help you land more house at a lower budget, they aren’t for everyone. Carefully consider your access to funds for a renovation, your ability to land a great deal and whether or not you have the temperament required to tackle a project like this. If you have the right set of circumstances, skills and patience, a fixer-upper can be an excellent option for a first home.


If you’re ready to learn what you qualify for, speak with one of our mortgage experts today.


This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.

Questions? We are here for you...

To ensure your safety, please do not include sensitive information in your submission.