If you have less cash and more time and effort to give, a fixer-upper could be ideal first home buy.
Getting on the housing ladder is no easy feat today. Expensive and hard to get mortgages, combined with high house prices, mean that choices can be limited for first time buyers. Sometimes, you may have to accept that you simply can’t afford to buy your dream home. But what if you could buy a property and then convert it in to the place of your dreams? If that appeals to you then a fixer-upper might be the answer.
What is a fixer-upper?
It’s effectively a property that needs work. The ideal fixer-upper is one that is structurally sound but requires some attention when it comes to interior design. Structural issues could be very expensive to fix and you may also struggle to get a mortgage for a property that is in a really dire state of disrepair. So, if this is the choice you’re planning to make then look for a property that has enough challenge to push the price down but is still within your DIY skills and experience to fix up.
The benefits of a fixer-upper
- You could live in a great neighbourhood. If you’re all about the location then a house that’s seen better days but is located in a perfect part of town provides the opportunity to, one day, be a great home in a great part of town.
- The fixing up process will add value. Any work that you do to the property should add to its value. So, from the moment you begin renovating the bathroom or redoing the floors, the fixer-upper starts to increase in value as an investment.
- You can design the property exactly as you want it to be. With a fixer-upper you’re effectively starting from scratch so you can design and renovate it to suit your own personal tastes. If you have plans to sell it on later it’s worth remembering others may not have the same taste when you’re considering black walls or bright green carpeting.
- You should get more space for your cash. Generally, you’ll pay more for your space if that space has already been beautifully renovated. If the space is a bit of a wreck then the price per square metre is going to be considerably less and so you’ll be getting more space for your money. This could be an important factor if you can’t borrow as much as you would like. If this applies to you then a cheaper fixer-upper home may be your best idea to create extra space.
The potential cons of a fixer-upper
- You may spend more than you planned to. If you blow your budget then you may have to sell almost straight away, which could defeat the object of owning a fixer-upper to get onto the housing ladder.
- You may never finish the project. Living in a building site is not much fun, even if it means you’re on the housing ladder.
- The housing market could take a dive. House prices have proven pretty resilient but if they do take a sharp dip then you may find yourself with a fixer-upper already worth considerably less than what you paid for it.