Mortgage Advice & Articles
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Should you buy and renovate a home?

August 06, 2007

The option to buy and renovate an older home can be very appealing. However, you need to consider carefully to be sure it’s the right decision for you.

Advantages

  • Buying a home in need of repair can be an opportunity to save money.
  • It might be easier to afford to buy into a certain neighborhood if you purchase a home that needs some work as opposed to one that is already renovated.
  • When you buy and renovate a home, you can put your own personal stamp on it and make the home distinctly yours.
  • If you are handy, there can be a lot of personal satisfaction -- and extra savings -- in doing much of the work yourself.

Disadvantages

  • Even though the initial price of a home in need of repair may be cheaper than that of other houses in the neighborhood, once you factor in the cost of the renovations, it could end up being even more expensive.
  • You may need to arrange additional financing in order to pay for the improvements.
  • If the home is priced extremely low, it may have major problems. You need to be careful you aren’t taking on too much. Do you really want to deal with major plumbing or electrical issues?

Financial issues

  • Find out what the difference in price is between a house in the neighborhood that is already renovated and one that still needs renovation.
  • Calculate the estimated total cost of the necessary renovations.
  • Discuss with an agent what you plan to do with the house and see what the agent estimates the house could be worth once those renovations are completed. You don’t want to price your renovated home out of the neighborhood.

Finally, be realistic about what you are able to do and what you are willing to put up with. In order to buy and renovate a home, you need to have the time, money and patience to complete it. For some people, it can make the home buying experience more fun and fulfilling. For others, the added stress may not be worth it.


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