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There are many home types to choose from when browsing properties to buy, but two of the most common ones are fixer-uppers and move-in-ready homes. While a move-in ready home is the most convenient, it can also be much more expensive. And while a fixer-upper can initially be affordable, it requires a lot of hard work and dedication. How can you decide which home is a good fit for you? Let’s delve into the pros and cons of each home type to help you decide between buying a fixer-upper or a move-in-ready home.
Fixer-Uppers
A fixer-upper is a home that will require significant remodeling and renovations after purchasing. Typically, these homes are old with outdated appliances and designs and may even have structural or electrical issues.
Affordable for First-Time Buyers
The biggest draw of a fixer-upper is its low price. For first-time homebuyers, a lower price is especially appealing, as it significantly reduces the time needed to save for a down payment. In many of the biggest cities in the U.S., it will take over 10 years to save for a 15% down payment, with Miami, Boston, and San Francisco requiring around 15 years of saving. Cutting down on the time it takes to save for a down payment allows first-time buyers to enter the housing market sooner and start building equity faster.
A Smart Investment or a Risky Gamble?
Many people buy fixer-uppers with the intention of “flipping” them—making improvements and selling them for a profit. According to Frontdoor, a home repair and maintenance company, the average ROI on buying a fixer-upper in 2023 was 27.5%, but results can vary by location. In Lexington, the average ROI was just over 11%, while in Miami, it is over 17%. Home buyers should consider the demands of their city and determine if flipping is an effective strategy.
Though home flipping can be lucrative, its popularity is declining—likely indicating that turning a profit in this market is becoming increasingly challenging. In 2023, the number of properties flipped dropped by 29.3% from 2022, according to data released by ATTOM. With this in mind, buyers should carefully consider if the effort of house flipping is worth the potential gains.
Repair Costs May Start to Add Up
House flipping can generate a profit because the owners invest a significant amount of time and money into remodeling and upgrading the home’s features. A fixer-upper will likely require some expensive repairs and upgrades like new flooring, new appliances, replacing countertops, updating electrical systems, and fixing foundational damages.
Buyers of a fixer-upper must carefully consider how much they are willing to spend on renovations and factor these costs into the home’s total price. Renovations on a fixer-upper can take months or even years to complete, making it a long-term project rather than a source of immediate income.
You Don’t Have the Time to Renovate and Remodel
In addition to the costs, fixer-uppers demand significant manual labor and effort. Many people who invest in a fixer-upper spend their weekends and evenings working on renovations. If you cannot dedicate much of your free time to improving your home, a fixer-upper might not be the right choice for you. Alternatively, if your budget allows, you can hire professionals to handle the renovations, which will add to your overall expenses.
Move-In Ready Homes
A move-in ready home will not require any significant repairs or renovations and can be immediately lived in after purchasing. Move-in ready homes are typically newer homes or homes that the previous owner has already updated.
Upfront Costs Will Be More Expensive
The asking price for a move-in ready home is typically much higher than that of a fixer-upper. For those on a budget, saving for a down payment on a move-in ready home can be more challenging. You might need to consider smaller homes with fewer bedrooms or look in less desirable neighborhoods to make a move-in ready home more affordable.
Enjoy New Amenities and Features
The higher price of a move-in ready home reflects its enhanced value and convenience. These homes are designed to appeal to buyers who want a hassle-free experience, offering modern, updated features that eliminate the need for immediate renovations. Move-in ready homes often include brand-new appliances, freshly painted interiors, updated flooring, and sometimes even energy-efficient upgrades.
On the other hand, with most of the amenities and appliances already upgraded before purchase, this offers less opportunity for customization. Buyers may need to adjust their expectations or preferences when moving into a move-in-ready home. Alternatively, they might incur additional costs to modify features that don’t meet their personal tastes.
A Stress-Free Start to Homeownership
For first-time home buyers unfamiliar with the home buying process, a move-in ready home may offer the most seamless transition. With no need for post-move upgrades or repairs, the premium price offers peace of mind and assurance of a problem-free home. Given that the home-buying journey can be lengthy and filled with paperwork and tough decisions, choosing a move-in ready home allows you to finally relax after closing day and immediately enjoy the comfort of your new space.
This is also beneficial if you have a short timeline and must move to your new home as soon as possible. Whether you’re relocating for work, starting school, or managing other time-sensitive commitments, a move-in-ready home allows you to settle in without the stress of renovations or repairs. It ensures you can focus on adjusting to your new environment and responsibilities instead of worrying about fixing up your home.
Are you looking to enter the real estate market this year? Give us a call today! One of the experienced agents at Zoocasa will be more than happy to help you through the exciting home-buying process!
The post How to Decide Between Buying a Fixer-Upper or Move-In Ready Home appeared first on Zoocasa Blog.
