Pros and Cons of Fixer Uppers

by Sandy L on September 9, 2010

We have been home owners for about 10 years now.  I love my home. It’s a Colonial Built in 1959 with 3 bedrooms, 2 baths and is just over 1700 sq/ft. It’s situated on a cul de sac and I like my neighbors.  When we bought the house in 2000, that’s about where the charm ended. We chose the route of buying a house that needed A LOT of  work and tailoring it to our tastes as we got the cash.  It was decorated ala Brady Bunch…flower power or foil wallpaper in every room of the house, dark chocolate pine kitchen cabinets, avocodo and mocha colored bathroom fixtures, shag carpet. It wasn’t just all cosmetic stuff either. It needed a roof, a furnace, new doors, new windows, and a new sewer line.  It was a beaut.

Our Dream Kitchen Post Remodel

Last year marked our last major home improvement project, the kitchen. If I look how much money we put into it, vs what we can sell it for, we probably will break even, or maybe even lose a little money.  I wonder now if we should have spent a little more and bought something that was more “done.”   I can honestly tell you that I looked for almost a year and I didn’t walk into a single house and say “I love this decor.”  Based on that, I’m thinking that even if we got something nicer, we still would have spent a small fortune decorating it to suit our tastes.  The homes that were in better shape generally used low end building materials that were too nice to tear out but too cheap for me to like. You know the stuff…those oak builder basic cabinets and formica counters.

So now that I’m older and perhaps wiser, I thought I’d summarize what I think the pros and cons of a fixer are.

Pros:

  • You have a smaller mortgage payment. (Good on so many levels.)
  • You can add equity to your home by paying as you go on projects. (Somehow it’s mentally easier for many to do this vs paying extra on the mortgage. Perhaps because it’s tangible stuff you’re spending money on?)
  • You don’t have to feel guilty and wasteful about pulling out those “builder basic” cabinets and upgrading to nicer stuff.
  • You get to find out which of your friends has no vision whatsoever when they come over and can’t think of a nice thing to say…vs the folks who immediately see the potential.
  • You’re probably going to spend money to customize it anyway, so why not buy something undervalued.
  • You have an excuse to learn new skills and buy tools.
  • You get a sense of satisfaction when looking at completed projects (especially the challenging ones).
  • You can get a bigger house or one in a better location with the trade-off that it needs work. Generally people earn more as time goes on, so you might be able to avoid going the starter home route if you buy something with the potential to be nice.

Cons

  • You always have a room in your house that’s torn apart
  • Projects don’t get done as fast as you think they will.
  • You have less free time to do other stuff
  • Most remodeling projects do not return 100% of the money invested, so customizing to your tastes is more expensive than buying something that’s already done (because the previous owner is the one who got 50-85% back on his remodel.)
  • Most fixers have hidden problems that make accurate budgeting difficult.
  • If you unexpectedly have to sell your house before it’s fully remodeled, it might be harder to sell than one that’s in better shape.

I would also never recommend a fixer if you are using a high percentage of your income for the mortgage.  There was many a month where our home depot bill exceeded our mortgage payment.  I underestimated the costs by about 50%  and time spent by probably 3x. I can’t even imagine how much more we would have spent if my husband and I weren’t handy.

What other pros and cons am I missing?  Has anyone done both? Which route do you prefer and why?

{ 6 comments… read them below or add one }

Nicole September 9, 2010 at 8:41 AM

We picked a house that we thought didn’t need anything. Of course the gas line to the house broke right away, then the water heaters died, etc. And although the kitchen looks nice, it isn’t actually very functional and the countertops turn yellow with bleach. And, of course, there’s the carpeting in the bathrooms and dining room which is just weird. After you move in, even a seemingly perfect house isn’t.

So far though, the only changes we’ve made have been to the yard– pulling out dead/dying trees and putting in new trees. Getting rid of pampas grass so the city would stop mailing us periodically about obstructing line of sight on the road.

This is really the first year we have enough money saved to actually afford any remodels, but we really don’t have the time. Maybe in a couple of years if we both get tenure.

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Budgeting in the Fun Stuff September 9, 2010 at 3:49 PM

We looked for a house that was good-to-go…not perfect, but no real work that had to be done. We got pretty lucky with our foreclosure. Good craftmanship meant that the house is solid and all we had to do was supply appliances and light bulbs. Over the last 3 years, we’ve also had some berber carpet replaced with wood laminate and changed out a bunch of fixtures and the downstairs bathroom mirror. Oh, and we painted the bottom floor. Overall we put in about $3000-$3500 and are very happy with the results. :-)

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ODWO September 9, 2010 at 10:27 PM

Great Advice FGA. We’ve looked at both kinds of homes. The fixer-upper is always cheaper … but! (and but again) If we get the one we want in the area we live in … might be worth the trouble. (but then I contradict my own thinking and wonder “what if.” Am I feeling unproductive or motivated about a remodel? Right now .. not!)

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Lola September 10, 2010 at 11:32 AM

Your pro/con rundown looks very accurate!

I’ve never really been one for home improvement projects myself, but we did remodel our kitchen about 7 years ago, doing some of the work ourselves and using contractors for other things. In retrospect, it wasn’t too awful and I love the results, but you are certainly right about a project always taking more time and more money than you estimated!

Your kitchen looks wonderful, and I especially like your artistic arrangment of the cute little noggin in the high chair on the right!

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Money Reasons September 11, 2010 at 9:01 AM

We built our house new, just so it would be maintenance free for a while. So you describe our builder basic cabinets to a tee! But that’s okay, it really does look nice, and we had the added benefit of choosing little perks that people that buy used don’t have (live special wall deviation from the blue prints, an extra layer of brick in the basement, and other small customizations).

We looked for a long time too (in different cities even), and I couldn’t find one house that we looked at that wouldn’t involve at least ripping the carpet out and redoing the bathrooms.

We’ve really outgrown our house, but during these economic times and since I’m the primary breadwinner (my wife started working 6 – 8 hrs a week recently), we’re okay with that for now.

Nice job on the kitchen! It looks like it could be in one of those fancier house magazines!

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Financial Samurai September 12, 2010 at 8:42 PM

Beautiful kitchen! Don’t you think that after all that remodeling though it’s all worth it? Eventually, everything will be as close to your liking as possible!

Home remodeling can become an addiction, so ya just gotta know when to quit. I remodeled for the first 1.5 years, and that’s it! Love it now.

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