Whether you want to cut the purchase price of a property or just fancy a challenge, buying a ‘fixer-upper’ can be tempting.
Fixer-uppers are often a cheaper option and can be a great investment opportunity if you manage to increase the value of the property through your renovations.
Unlike new builds – which can lose value over time, fixer-uppers have the potential to make a huge profit – but only if you have the time and patience to take it on.
The amount of work that needs to be done to renovate a property should not be underestimated – all whilst juggling work, kids and the general stresses of life.
Home renovations can be a time-consuming and stressful process especially if you find unexpected and costly issues along the way.
The time it takes to complete will depend on how much work needs to be done. According to figures, the majority of large renovations take one to three years to complete – but this will vary depending on your budget, team size and project requirements.
We have rounded up some of the pros and cons of fixer-uppers to help you decide whether it sounds like it’s for you:
Fixer-uppers – Pros and cons
Pros
- Affordability
Buying a fixer-upper can be an affordable way to get on the property ladder and live in your desired area. They typically come with lower purchase prices, and even after renovation costs, they can end up saving house-buyers thousands in the long run.
- Personalisation
By renovating a property, you can personalise it how you wish. For example, if you want a larger kitchen and a smaller dining room, you will be able to accommodate that. However, make sure you check the planning regulations to ensure you do not need permission for your dream home.
- Profitability
Fixer-uppers have a lot of potential for profitability if you buy them at a low price and add value to the property. Unlike new builds which can lose value, fixer-uppers can be a great investment.
Cons
- Unexpected costs
Despite the lower purchase price, you may run into costly issues that you weren’t expecting. For example, as renovations get underway, you might discover issues with the plumbing or electrics, dampness or structural issues which can lead to an increase in cost.
- Time
Renovations can take a long time, especially if you are relying on external workers or builders to carry this out. In some cases, you may not be able to move along with the renovation process until a certain task has been completed by a professional, and you are reliant on their availability which can be frustrating.
- Hard work
If you want to keep costs down and carry out as much as possible yourself, it can be hard work. Think about knocking down walls, disposing of waste or painting rooms – it can take time and effort to complete. Renovations are hard work.
- Underestimating DIY expectations
It can be very easy to underestimate DIY tasks – from the time it takes to complete a project to the level of skill needed to complete it.
For example, just because you have seen a how-to video online, it may not be as easy as it looks to do yourself. This may lead to you needing to pay out for a professional to complete a task you thought you could do yourself, or even fix your mistakes.
- House renovation mortgages
Getting a mortgage for a fixer-upper can be complex. House renovation mortgages are different to ordinary mortgages as there are a lot more factors to consider.
By applying for a house renovation mortgage, you will borrow the money for the property and the cash to perform the renovations – but depending on the state of the property, it may be more difficult to find a mortgage provider.
The majority of high-street banks and mortgage lenders won’t offer mortgages if:
- The property is derelict, due to neglect, for example
- The building is uninhabitable, such as having no functioning bathroom or kitchen
- A conversion is needed
Lenders may need to run more checks than with a standard mortgage as they want to feel assured the work required isn’t risky for them.
Meanwhile, if the building is habitable but needs work, a lender may not lend the full amount. They may withhold some funds, known as retention, until essential repairs are completed. The property may need to be re-assessed before the remainder of the funds are released.
Further reading
Purchases – Oakwood Property Solicitors
WHAT TO DO NEXT
To make a start on the next step in your property journey, get in touch today to book a consultation with a member of our team. Call us on 0113 218 5727 to find out how we can help you.
