Buying a home is one of the biggest investments you’ll ever make. Depending on how you approach the process, it could have serious financial and emotional effects on you and your family. If you pick the right home for the right price, you can live comfortably for years. But if you bite off more than you can chew, you may lose your home and your good credit.
Given the risks involved, you know that you want to approach your next home with caution. You’ve likely met with your mortgage specialist to determine how much house you can afford, and maybe you’ve already hired a realtor to help you find the right home in St. George, Utah.
After several weeks, or even months, of searching, you’ve narrowed your options down to two choices: an older, yet less expensive fixer-upper of a home and a newer, more expensive home ready for the next family to move in.
How do you know which to choose? Ask yourself the following questions before you decide.
1. Do You Have the Time and Patience for the Project?
Many homeowners have a vision of the perfect place to live. Perhaps you want a stainless steel kitchen with the latest appliances. Maybe your wife wants a massive entertainment room complete with projector screen and theater-style seating. Or maybe your kids want a backyard with a pool.
However, many homeowners fail to realize that installing these features in an older home takes time. Replacing carpet and repainting a room could take a few days. Adding an entire room could take weeks. Completing all the changes necessary to create your dream home could take years.
Are you willing to keep items in boxes to avoid paint splashes? Do you have the patience to eat cold cereal or fast food while you redesign your kitchen?
If so, that fixer-upper may be a good choice. If not, you’ll feel happier in a newer home that already fulfills your wants and needs.
2. Can You Perform the Renovations Yourself?
Before you decide to fix up an older home, you should carefully analyze your current skillset. If you have the background or experience fixing electrical equipment, performing basic plumbing repair, or installing new shingles, you could save a great deal of money on labor.
However, if you have to pay an entire crew of contractors to upgrade an old bathroom or finish a basement, you may end up paying more for the renovations than you saved when buying the older home. And should you decide to sell the home later, you don’t have a guarantee that all those changes will warrant a high return on your investment.
3. Does the Home Need Cosmetic or Structural Improvements?
Cosmetic changes such as a new coat of paint or replacing old awnings won’t cost you much and can ultimately make your house look more attractive to other homebuyers. According to some estimates, swapping out an old door can generate as much as a 98% return on your investment.
Structural changes, on the other hand, are rarely a good investment. Foundational issues, pest infestations, or old plumbing cost a great deal to fix, and they often indicate the house is in poor shape. Even if you manage to fix one problem, another more costly repair may soon be on the horizon.
Unless you have unlimited funds that you can sink into a poorly constructed house, you may save money in the long run by investing in a newer, more structurally sound building.
4. Can You Afford the Remodel?
Your budget should play a key role in your decision-making process. Many homeowners struggle to make the down payment for a new home, and without adequate planning, some homeowners continue to struggle to pay their mortgage each month.
Although a fixer-upper of a home might save you a little on your initial payments, you might not have the funds to make additional repairs or changes to your home.
Before you purchase a home, have a professional inspect it and estimate the cost of making repairs, including materials and labor. Oftentimes the total cost of the repairs combined with the initial sale price of the home far outweigh the price of a newer home in better condition.
5. Do You Feel Prepared for the Worst?
You never know when the worst could happen. Pipes can freeze and burst. Falling tree branches can break windows, and toilets can overflow.
As you decide between a fixer-upper and a newer home, remember that newer homes often have more expensive appliances which can be expensive to replace. However, older homes may have weaker materials more susceptible to water damage and rot, so you may have to replace large sections of your home during an emergency.
Also, you should keep in mind that insurance rates depend largely on the age and construction of your home. Newer homes tend to be in better shape, so they often qualify for lower rates than older homes.
Now that you have a better idea of what factors can affect your fixer-upper, you can make an informed decision about which home is right for you.