Fixer Upper vs. New Home - A Pro vs. Con List
Posted by Eric Skates on
If you are considering buying a house, chances are you have heard a few arguments for either buying a fixer upper or buying in a new neighborhood. Here are few pros and cons for both sides.
Pros and Cons of Buying a Fixer Upper
Pro: You will not have to come up with as much in the way of upfront costs. Because fixer uppers are in less than perfect shape, the purchase price can be considerably lower. This leaves you with (some) money to put towards renovating it into your dream home.
Con: While the upfront cost may be lower, chances are you will have to take out a construction loan to help cover the cost of renovations if you want them done before you move in. You'll be paying both loans off at the same time, which could end up costing more in the long run than the mortgage alone on a new home.
Pro: Buying a fixer upper can get you into your dream neighborhood sooner because the cost of getting into it is lower than a new home.
Con: You will have unexpected, and probably large, expenses once you start tearing down walls on the inside of your fixer upper. The older the home is, the more likely you are to run into issues like outdated electrical and plumbing work or asbestos. Any one of these issues can blow your renovation budget out of proportion and wind up costing you more than a new house might have.
Pro: You can customize your home and make it what you want. Most new houses being built are similar in design and materials used. In a fixer upper, you get to put in what suits you and keep the charm that drew you to it in the first place.
Con: You do need to be careful how much value you add to your fixer upper - especially if you plan to resell your home at some point in the future. Adding too many high-priced upgrades (and too much value) can raise it too far above the values of surrounding homes and make it difficult to sell when you put it back on the market.
Pro: Your fixer upper (and the neighborhood it's in) will have more mature landscaping. If trees and other plants are planted in the right spots, they can drive heating and cooling costs down significantly throughout the year.
Con: If the landscaping has not been maintained, it will be another expense to add to your ballooning renovation budget.
Pros and Cons of Buying a New Home
Pro: Everything in the house is already up to date, energy-efficient, and is under warranty for at least ten years from the home builder. You will not have to spend money on bringing it up to today's standards or on repairs.
Con: With everything being up to date and under warranty, the upfront cost for a new home can be significantly higher. Your budget may not be big enough to purchase it. Even if you can, you do not have as much say in what goes into the house - unless your new house is a custom build. Chances are, you will get a cookie-cutter home that does not stand out in a sea of similar houses.
Pro: Moving will be less of a rush because new houses take time to build. The average amount of time it takes to build a new house is five to six months, which gives you more time to prepare. Less rushing around and trying to figure out logistics can make the process less stressful.
Con: You cannot move in until the house is finished. If you need to move out of your old house sooner than the new house can be built, you will have to make arrangements to stay in the old house or find something to rent until it is finished - an added expense and an inconvenience for you and your family.
Pro: You'll have access to neighborhood amenities. Most new homes are built in master-planned communities with amenities like splash pads and neighborhood recreational areas.
Con: The locations for these communities are usually less than ideal. Choosing a new home in the suburbs means longer work commutes, while choosing new homes in urban areas means sacrificing outdoor space.
There are many other considerations to make when it comes to deciding what kind of house to buy. The best advice anyone can give you is to weigh your options carefully and choose the kind of house you want to make into your home - whether it is glossy and new or needs a little work to make it shine again.