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Pros and Cons of Buying a Fixer-Upper
Pro: Lower Taxes
Because property taxes are based on the purchase price of your home, you'll likely pay less taxes on a fixer-upper than on a turnkey house. You may even get tax credits for energy-efficient upgrades! Even if the improvements don't qualify for the tax credit, you'll increase your home's cost basis, meaning you'll pay less in capital gains tax if you decide to sell in the future.
Pro: You Can Customize Your Home
Another benefit of purchasing a fixer-upper is that you can renovate it to match your design style. You can choose all the finishes and customize the look of your home --an opportunity that isn't often possible on a turnkey property.
Con: Renovations Can Be a Hassle
Renovations can be time-consuming and stressful. The average remodel will take four to eight months! If you don't want to bother with the hassle of managing contractors and living in a construction zone, you may want to buy a turnkey home.
Pros and Cons of Move-In Ready Homes
Pro: You Can Move In Right Away!
One of the best things about purchasing a turnkey home is that you can move in immediately and start enjoying life as a homeowner. The biggest task you'll have is unpacking your boxes and painting a room or two. While move-in ready homes cost more than fixer-uppers, they're much more convenient, so you may find the extra expense is worth it.
Pro: Easier To Budget
Move-in ready homes are easier to budget for because you won't have to consider the cost of remodeling. While you can get a renovation estimate beforehand, there's always a chance that you'll spend more. About 30% of renovations go over budget, which can completely throw off your finances.
Con: It May Not Be Exactly What You Want
Even if it's a turnkey home, it might look different than you want. You may not like the color of the countertop in the kitchen or the tiled living room floor. And because you paid more for a turnkey home, you may not have the budget to make any changes for a long time --even years. If you want some wiggle room in your budget for upgrades, it may be better to purchase a fixer-upper.
Want to crunch the numbers to see which suits your finances best? Contact us today for an obligation-free consultation with a mortgage advisor.