According to a recent survey conducted by Trulia, an online real estate resource and community, 41 percent of Americans say they would prefer to buy a brand new home rather than a previously owned property. However, fewer are willing to pay the premium prices required; the median price of new homes in the U.S. is nearly 50 percent more than that of pre-existing properties. Whether you’re among the bargain seekers or just dream of spending your weekends on home improvement projects, consider these reasons a fixer-upper might be right for you.
You can lower your mortgage payment.
Previously owned homes cost less than new builds, and one that needs a little work is going to come with an even lower price tag. The lower the sale price, the lower your mortgage payment will be. And what you save on monthly premium and interest, you can put into repairs and improvements.
You can buy in a better neighborhood.
If you’ve had your eye on a particular neighborhood but the newer homes in the area are out of your price range, a fixer-upper can open the door. Sure, you might have to deal with an outdated kitchen or lackluster landscaping until you have the time and money for replacements, but that’s a small sacrifice to shorten your commute or get your kids into the best school in the district.
You can secure a bigger return on investment.
There’s a reason professional house flippers choose their profession—buying a rundown property, fixing it up, and selling it at its new and improved market value can yield a nice return on investment. The return can be even better for homeowners. IRS Code 121 allows you to enjoy up to $250,000 of your profits tax-free if you own a property for at least five years and occupy it for at least two before selling. If you’re married and file a joint tax return, that equates to up to $500,000 of profits tax free.
You can get exactly what you want.
Sure, you could by a more expensive, updated home with fresh paint, new carpets and a recently renovated kitchen. However, if you have a particular picture in mind of how you want your home to look, you might prefer a fixer-upper. For a lower selling price, you can buy an older property with the architectural features and character you desire, and then invest in the flooring, wall coverings, appliances, cabinets and other details you need to recreate your dream home as reality.
If you don’t have the budget for contractors and you’re not into doing it yourself, a fixer-upper could be more of a pain than a pleasure. However, if you know what you’re getting into—and embrace the repair and renovation process—you could find a previously owned home highly rewarding. Contact your real estate professional today to discuss the pros and cons of fixer-uppers further.
