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Should You Buy a Fixer-Upper or a Move-in Ready Home?

If you're in the market to purchase a home, you'll likely be faced with two very distinct choices. You can either purchase a fixer-upper and make it your own, or you can opt for a move-in ready home that's already completed for you.

There are many pros and cons to buying each. You can get great deals with a fixer-upper, but it takes a lot of work -- and some money -- to complete. You'll probably have to pay more money for a move-in ready home, but you won't have to worry about fixes and repairs necessary before you even live there.

So, what should you do? Let's dive deeper into both options to see which one might be right for you.

Pros of a Fixer-Upper

Buying a fixer-upper can be a lot of fun. Having the ability to start with a relatively clean slate allows you to let your mind run wild with the possibilities. You'll be able to cater the layout and design of the main rooms in the house to your liking. You can do this with a move-in ready home, too, but it's often much more difficult and expensive.

Fixer-uppers are usually much less expensive than move-in ready homes, and this can benefit you in two ways. First, after you make the renovations to the property, you will likely have a lot of equity in your home. This is great for when you go to sell the home, or if you ever need to tap into the equity to fund future projects.

Second, purchasing a less expensive home will usually result in lower property taxes. In some parts of the country, property taxes are a significant amount of money each month. Buying a fixer-upper can allow you to finance less money on your mortgage and pay less in property taxes each month at the same time.

Cons of a Fixer-Upper

The biggest and most obvious downside to purchasing a fixer-upper is the work you'll need to do to the home. Even if you consider yourself handy, the renovation work can become a hassle, especially if there are a lot of renovations to do. And if you're not going to do the work yourself, it can get quite expensive to outsource the work to professionals.

There is always the possibility that the scope of work the home requires is a lot more than you thought at first. Once you start doing demolition, you might find surprises behind the walls or in the ceilings and floors that you weren't expecting. This could result in a project that costs more money than you had planned for.

It can also be more challenging to get financing for a fixer-upper. Depending on the condition of the home, you may not be able to get certain types of loans. While rehab loans are a great option to finance the cost of your home improvements, some lenders won't allow the homeowner to be the ones who do the work. 

Pros of a Move-in Ready Home

The main advantage of purchasing a move-in ready home is that it's a turnkey property. In other words, all you have to do is turn the key in the lock, open the door and move right on in. These properties typically don't require extensive renovation just to make them livable.

While one of the downsides to move-in ready homes are that they are more expensive (more on that in a bit), they do provide one major financial advantage -- they provide economic certainty.

When you purchase a move-in ready home, you'll know exactly how much you'll be paying for it each month. You won't often have to budget for major renovations on top of annual maintenance.

Fixer-uppers, meanwhile, can get real expensive, real quick. That's because, according to a study conducted by U.S. Houzz & Home in 2020, 31% of all home modeling renovations went over budget in the previous year. This won't be much of an issue with move-in ready homes, allowing you to properly budget your monthly finances.

Another advantage of purchasing a move-in ready home is that you'll have many different financing options. You typically won't have to worry about picking from a limited number of lenders or a limited number of mortgage types. This could allow you to pick a mortgage that fits your financial needs best.

Cons of a Move-in Ready Home

One of the main disadvantages of a move-in ready home is they are typically more expensive. Sellers likely put in a good amount of money to renovate their home and maintain it well before they put it on the market. And when they list it for sale, they want to recoup that cost and make some money on their investment.

This drives the cost of move-in ready homes higher than fixer-uppers. In some cases, it could price out certain buyers who can't afford the monthly payment or can't qualify for the financing.

While move-in ready homes don't require major renovations, they also may not be designed to your style. Even if all the floors have been redone and the house freshly painted, it may not be the style or colors you want, for example. Since you paid a premium to get the move-in ready home, you may not want to pay even more money to repaint the home.

So, What Should You Choose?

It's not always an easy choice of whether you should buy a fixer-upper or a move-in ready home. What all homeowners need to do is weigh the pros and cons of each, and figure out what works best for them.

Purchasing a home is a very personal experience. What works for one person may not work for another.

Consider all of the factors upfront, including what you can afford, the potential costs of a fixer-upper and whether you're willing to deal with renovations. Then, search for homes that fit your criteria.

In the end, you can have a wonderful experience in the short- and long-term buying each type of home. 

 

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