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Fixer Upper vs. Move-In Ready: Which One Is Right For You?

When it comes to buying real estate, you want to make sure the property you purchase is the right fit for your needs. For some buyers, purchasing a home that needs some work is the ideal situation. For others, getting a turnkey home that’s move-in ready is the only option they’ll consider. And for still others, both seem like reasonable options.

The question is: which is for you? There are pros and cons to both fixer uppers and move-in ready homes. The important thing is to recognize which is the best fit for you, your budget, and what you want out of a home.

Let’s take a look at the pros and cons of fixer-uppers and move-in ready homes to help you determine which is the better fit for you:

Fixer-Uppers:

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Fixer uppers are, as the name implies, homes that need a bit of TLC – or fixing up – upon move in.

PROS

Discounted price
The major draw of fixer-uppers is the price. Since they need work, you can typically get a fixer-upper at a fraction of the cost of a move-in ready home of a similar size or in a similar location. So if you’re on the hunt for a bargain or you have a tight budget, a fixer-upper is definitely going to be the least expensive home-buying option.

You can make the house your own
Since a fixer-upper will need work and renovations, it does offer the opportunity to put your own stamp on the design and layout and really make the house your own. With a move-in ready home, the work has already been done and the home already designed. With a fixer-upper, you get the opportunity to build your home from the ground up with everything from flooring and cabinetry to landscaping and windows.

It’s a project
For people who are interested in home renovation, there’s nothing better than a fixer-upper. Taking on the challenge of completely transforming a home is a really exciting prospect for a lot of people, and if you’re in that camp, a fixer-upper is a great opportunity to take on a worthwhile project.

CONS

It can get expensive
Even though the purchase price of a fixer-upper is typically low, if there is a significant amount of problems with the property or changes that need to be made, it can definitely get expensive. Things like repairing electric, adding a new roof, tearing up and installing new flooring, and redoing a kitchen can get pricey, and if you’re not careful, you can find yourself way over budget, swimming in contractor bills with no end to your renovations in sight.

It takes time
Even if you’re a person who loves renovating homes, there’s no escaping the fact that it takes time. If you need to move into your home quickly, a fixer-upper isn’t going to be the right fit.

Move-in Ready:

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Move-in ready homes are recently built, updated, or remodeled homes that need next to nothing in terms of renovations or improvements. You can comfortably move in without making a single change.

PROS

It’s convenient
In terms of convenience, you can’t beat a move-in ready home. Moving can be a stressful process, and for many new homeowners, the last thing they want to do upon moving into their new home is to start managing a bunch of renovations. With a move-in ready home, once you move in, you’re done. While you may want to make some cosmetic changes down the road (like painting the walls or changing the flooring), there’s nothing that needs to get done after you move.

Better energy efficiency
Newer, move-in ready homes tend to be more energy efficient, which is not only better for the environment, but also better for your utility costs. Energy efficient homes require less energy to heat the home during the winter and cool the home during the summer, which can end up saving you a significant amount of money in the long run.

CONS

Home prices are higher
When you buy a move-in ready home, you’re paying for the convenience. Move-in ready homes will always be significantly more expensive than fixer-uppers in the same neighborhood and of the same size. If you have a tight budget, you might have to make some sacrifices to purchases a move-in ready home, like buying a smaller house or buying in a less popular neighborhood.

The “cookie cutter” effect
When you buy a move-in ready home, everything has already been done for you. Which is certainly convenient, but it can lack originality, charm, and the architectural and decor details you might want in a home. Newer homes sometimes feel more generic and “cookie cutter” than their older counterparts, so if charm and individuality are important for you, a move-in ready home might not feel like the best fit.

Fixer uppers and move-in ready homes both have unique benefits and challenges. Ultimately, you have to go with the choice that best aligns with your budget, your needs, and your long-term goals for your home.

I’ve created a free guide to help my clients properly prepare for purchasing a home. If you’re thinking about buying a home in the near future (or ever…), grab a copy! The Ultimate Home Buyer’s Guide

Are Investment Rentals Right For You?

When thinking about investments and retirement goals, many people think about owning rental properties.  After all, they pay for themselves, right? They can be excellent additions to a savings and investment portfolio, but there are also risks. Here are the things to consider.

First off, the good news

If you are considering purchasing a rental property, just about all of your expenses are tax deductible (unless you rent to family members). Your mortgage loan interest, property taxes, andinvestment-rentals-cover maintenance expenses are all allowable deductions. Your accountant may find other deductions for you as well, such as a 27-year depreciation rule.

Now for the risks

Many areas are too expensive for rental investments. You will want to know that your monthly cash flow from the property meets or exceeds your expenses. In pricey locations, you may wind up upside-down and spending more each month than you are taking in. Believe it or not, prior to the Great Recession, many investors did not worry about rental income meeting expenses because they had so much ongoing appreciation in property value. We know how that worked out.

Speaking of appreciation, the best rental properties are in areas with steady appreciation in value. It is tempting to purchase costly investment properties in high-end neighborhoods, but you may get better long-term increases in value in other neighborhoods as well. This is important because you will eventually want to sell your property and make a profit.

fixerupper-movein-ready-coverOngoing maintenance is necessary, of course, but may cut into your spare time. You may also get that yucky middle-of-the-night backed up plumbing calls. Do you really want to handle this? The solution is to hire a management company, which will add to your (tax-deductible) expenses but may provide you with a lot of peace of mind.

Then there are landlord-tenant laws to contend with. Be familiar with your locality’s laws before even considering purchasing. Is there rent control? If your tenant stops paying, what are the rules for eviction? How much notice do you have to give before entering a property? Just about every city has posted laws online. You may wish to consult a real estate attorney if you have detailed questions.

It is tempting to focus on your monthly return. Keep in mind that vacancies and maintenance expenses are inevitable and make sure your budget takes those costs into consideration.

Finally, can you afford another monthly bill and twice-yearly property taxes? If your finances are already stretched, another payment or two might be really unpleasant, even if you are achieving a cash return.

If you have considered everything and still would like investment properties, have fun becoming a budding real estate mogul!

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No Down Payment? No Problem. You Can Buy A House With A Down Payment of $0

Most potential homeowners believe that in order to purchase a home they’ll need to come up with at least 20% for the down payment. And with the median price of homes in the US at $240,900, that’s a whopping $48,000. For many, coming up with that kind of cash just isn’t possible.

But while you traditionally needed a substantial down payment in order to secure a loan, today there are plenty of ways to become a homeowner—even if you haven’t saved a penny for a down payment.

In a recent video, the team at Realtor.com break down a few options available for potential buyers looking to buy a home without a substantial down payment. One option is a mortgage from the US Department of Agriculture’s Rural Development office, which provides 0% down payment mortgages to buyers in towns with populations of 10,000 or less (which covers 97% of the US!). Other options include mortgages from credit unions, VA loans, and down payment assistance programs. In addition to the options outlined in the video, nontraditional lending options like FHA loans are also a great way to purchase a home without breaking the bank with a down payment.