With higher interest rates and money much tighter right now, many buyers are considering alternative ways to access the property market. One way is to buy a fixer-upper, an older property in their desired suburb that requires renovation. Usually, these houses are available at a cheaper entry point, and because targeted renovations increase a property's value, they offer buyers the potential to create their dream home within their budget.

Today's buyers must think outside the box

When you get your sums and timing right, fixer-uppers are a great investment. But any major financial decision comes with its own set of risks, and television shows like Grand Designs demonstrate how easy it is to go over budget in what is for many, an emotional journey. Doubling costs due to poor planning or unforeseen weather events is entertaining when it's not your money at stake.

Today's buyers must think outside the box, and while some Millennials are moving back to regional towns to save money, others are buying inner-city fixer-uppers and renovating them over time. To prevent costly mistakes, most buyers rely on the advice of trusted real estate experts like us who offer them an invaluable "big picture" analysis of the current market.

Buyers of fixer-uppers must also be prepared for the unexpected

One piece of advice we offer is to “be prepared” for anything when you renovate - a motto that has stuck with me from my days with the Brownies. You can guarantee some surprises along the way like the ones we encountered during the remodelling of our home. Our additional costs included raising a floor, removing some old sewerage pipes from the garden, and replacing most of our lawn at the end of the project.

So, is it really worth buying a fixer-upper?

Let's check out the pros and cons.

The pros:

1. Uniqueness – Often, fixer-uppers offer unique features that you won’t find in newer properties. If cornices, original fireplaces and timber floors float your boat, this may be the type of property for you. 
2. Lower entry point – Perhaps the biggest draw of buying a fixer-upper is they allow you to move into your desired neighbourhood at a lower entry point - so long as you budget smartly.
3. More money savings when you carry out the work yourself – Handy or happy to do some labouring? By doing some of the work yourself, you save more money and reap the rewards when you sell.
4. Personalisation  – You can create a Sex In The City, bedroom-sized, walk-in wardrobe if you want it. Renovate and customise your home to suit your tastes and lifestyle and add value at the same time.
5. The likely increase in the value of your property – Nothing is guaranteed but if you get your maths and timing right, you should make money when you sell. It’s not rocket science: buy at the right price and sell at the right time and you should turn a profit.
6. Less competition – For many people, budget risks and the idea of living in a property during renovations are too much. This means less competition for fixer-uppers.
7. Larger properties - Many older properties offer larger floor plans with more land to accommodate bigger families.

And the cons:

1. Inconvenience – For large-scale, structural renovations, buyers must be prepared to pay for and live in temporary accommodation during the works, or live through the mess.
2. Financial risk - Additional costs for labour and materials and the impact of bad weather are outside of your control, but overspending on your design choices is not. Though we love the latest interior design trends as much as anyone else, overspending and over-capitalising are the most common ways renovators reduce their profit margins. Experts advise you to put aside a buffer of around 20% at the start of the project and think carefully about which parts of the property to invest in. Pools, for example, although a wonderful lifestyle choice, are rarely a good investment.
3. Market unpredictability – Timing is another aspect that is hard to predict. It is likely, but there's no guarantee you will sell your property at the best time.
4. The unexpected – It's impossible to pick up every potential problem with a building inspection or accurately cost out every repair until you start knocking down walls and pulling up floors. Weather, unforeseen structural issues, mould and asbestos are some of the issues that may affect your timeline and budget.
5. Inconvenience - It can be hard to live through the chaos of a large-scale renovation. And with so many decisions to make, it requires commitment and effort. 

Smart renovators make money 

The decision of whether to buy a fixer-upper is most likely one you'll make for the long term that will ultimately depend on your circumstances, motivation and resilience. There's no easy way to access the property market, but with the right fixer-upper, good planning and your eye on the prize, this particular journey is worth it for many buyers.

Check out our hub of off-market fixer-uppers

As Australia's leading off-market property service, we offer an impressive range of properties "with potential" and a selection of services that facilitate your buying journey from your first inspection to settlement. 

We understand the importance of a buying strategy, which is why we've made homebuying easier with Buyer Assist, a targeted, customised service that removes the stress from the process. Lending Loop, our sister company, helps our members secure the best deal from Australia’s biggest banks and specialist lenders, and our team at Conveyancing Loop offer a streamlined and secure digital service that is backed by personalised care and a people-first approach.

Ready to go? Sign up today for free access to our impressive hub of off-market and pre-market properties. Or let us guide you through the buying process step-by-step with Buyer Assist.

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