Most first-time home buyers have entertained the idea of buying a fixer-upper.
This trend is partially due to the fact your money can go much further when you buy a home that needs work. I also blame HGTV and their numerous shows with mind-boggling number of episodes showing homes being renovated.
My wife and I are always looking to maximize our finances (partially due to our student loan debt), so a fixer-upper seemed attractive to us. We figured we could renovate the house over time, doing as much of the work ourselves as possible to build sweat equity.
It’s also worth noting we found a house that had an apartment with a separate entrance built into the basement, creating an opportunity for rental cash flow.
Seven years ago we purchased our fixer-upper. Literally everything needed to be redone, though it was definitely livable and not in terrible shape. But there was no denying the fact that it was quintessential late ’70s and early ’80s design, and not much had been upgraded since then. Bathroom, flooring, kitchen, deck, yard…everything needed to be redone.
We are still living in the fixer-upper we purchased seven years ago, and we still have some big projects left. We’ve also completed many projects in those seven years and learned a lot.
Here are 10+ things I learned from buying a fixer-upper.
Everything Takes Longer Than You Think
The thing about home repairs, renovations, and projects, is that they typically involve doing things you have never done before.
To take a simple example, think of how many papers you have written over the course of middle school, high school, and college. It becomes easier and easier to crank out papers as you gain experience writing papers.
Compare this to, say, replacing a light fixture or cutting and installing trim. The first time you do it is going to take longer than you expect. With a fixer-upper there are a ton of small projects. When each project ends up taking longer than expected (sometimes significantly longer), time really starts to add up.
Because I’m a generally impatient person I can’t say that I’ve learned to embrace the fact that everything takes longer than expected with home projects, but I have at least accepted it as reality. If you haven’t bought a home yet and are considering a fixer-upper, go into it knowing that things will take longer than you think.
Everything Costs More Than You Think
This is another thing I blame on HGTV. Sometimes the renovation budgets are way lower than they should be. I know I’ve seen bathroom and kitchen remodels quoted as $5k-$7k at times. Trust me, you will pay more if you are hiring out the work.
In general, everything with a home ends up costing more than you think, and that becomes abundantly clear with a fixer-upper. It’s a combination of both seemingly small expenses adding up, such as the cost of tools and materials, and bigger costs adding up, such as hiring out a bathroom or kitchen renovation.
First, tools and materials can really add up. These are costs that I personally didn’t mind as I knew even if I was paying $200 for tools I was saving hundreds or thousands by not hiring out work. Regardless, when you have little or no tools it can definitely feel like you are constantly spending money on them. Eventually this slows down, of course, as you build up your inventory.
Second, small things can cost money. Need a plumber to clear tree roots from your sewer line? That’s a couple hundred dollars. Need an outdoor outlet added? A few hundred dollars. Want someone else to do the sheet rock and mudding on a large room or basement you are renovating? Could easily be more than a grand. These costs add up and are easy to not factor in when you are in the purchasing phase of a fixer-upper.
Finally there are big expenses that you may choose to not factor in, but eventually have to bite the bullet. When we first bought our house I always thought I would gut and renovate our main floor bathroom. But…then I realized how incredibly time-consuming that project was, and the fact that each week it dragged on would be another week we have to go to the basement bathroom, and another week that we couldn’t rent the basement apartment. So I paid…$17 grand…for the bathroom to be renovated. This ultimately was one of the best purchases I’ve made in my life. Which brings me to the next thing I learned…
You Can’t DIY Everything
Since buying our fixer-upper I’ve published two books and never missed a beat with Young Adult Money, all while working a 9-5. Not surprisingly, what I’ve learned is that contracting out big projects like bathrooms, kitchens, and decks, can make a lot of sense.
Even with professionals working on our house nearly full-time, it took a couple weeks for our bathroom and basement kitchen (for our rental apartment) to be completed. They both turned out incredible and I’m very happy with the outcome. Looking back I know that if I had gone the DIY route it wouldn’t have turned out as nice and it would have been incredibly difficult to complete the projects without taking off many days from my 9-5 job.
Just because you hire out things doesn’t mean you can’t do big projects yourself. I cleared out 10-15 cubic yards of dirt from our backyard and built a 40 foot retaining wall using 80 pound blocks, which saved me probably more than $10,000. It was a big project, but I could take my time with it and it was more or less physical labor than some expertise such as plumbing or electrical that would have taken many hours to make sure I did the project right.
I also ripped out all the carpet and some hardwood on our main level and put in new flooring, trim, and doors. This was a big project (and I did take about eight total days off from work to finish it), but it was something I knew I could do if I spent enough time and effort figuring things out.
The smaller projects have paid off as well. Whether its swapping out light fixtures, outlets, or light switches, or swapping in a new toilet, these small projects are doable and save a lot of money over time.
Delaying Things Can Be a Big Win
The bathroom renovation was expensive, but it was a huge transformation. Friends have called it “an HGTV bathroom” and a “spa.” It was a total transformation, but it did cost us $17k.
What benefited us was delaying it. Our bathroom was old and needed help, but we put off the bathroom renovation for five years. That gave us time to save the money and pay for the renovation in cash. We would not have been able to do that right from the get-go after purchasing our home.
In fact, I’m always looking at opportunities to delay projects. Six months or a year of putting off a project is six months or a year of cash flow that isn’t diverted to a home project.
Yes, there are absolutely times where you need to make a change ASAP due to safety reasons. But many changes people make to homes are cosmetic or “nice to have.” After seven years we still haven’t replaced the tiny, unsafe deck we have that someone probably threw together over a weekend in the late 70s (one of the supports is literally floating). But as I mentioned earlier, everything is more expensive than you expect. It would be at least $10,000 to replace the deck, and when we replace the deck we also want to replace some stairs and redo some other things surrounding the deck. Each year we delay is cash flow that can be used to save, invest, and pay off debt. We make do with our cement slab outside our basement and think about all the money we are saving.
YouTube is Your Friend
This is kind of a “duh” statement, but YouTube is your friend if you are a homeowner. It’s incredible how many tutorials are on YouTube. I made minor repairs to our washing machine and dishwasher by using YouTube. I’ve learned how to use tools and complete projects by watching YouTube.
Stuck on a home project? Head to YouTube.
Crazy, Unthinkable Problems Can Come Up
With every home there are things that will be discovered later on that you couldn’t have anticipated. I went into detail about our sewer drain-out fiasco that nearly cost us more than $7k (read the story to see how we ended up paying $0 instead). Our basement flooded the first Summer in our home because our backyard drain between our house and our neighbors ended up pushing water out from the main storm drain (apparently this wasn’t the first time…).
I’ve accepted the fact that crazy things can happen with a home, and oftentimes they come with expensive repairs. Granted, when you aren’t planning on paying for a repair or fix it can feel like any dollar amount is expensive.
If you have a fixer-upper it’s more important than ever to build a healthy emergency fund. If you don’t have one, you likely will end up taking out a personal loan or going into credit card debt at some point, both of which aren’t ideal options. Which brings me to my next point: you likely need more cash.
You Likely Need More Cash
A few things we’ve established so far:
- Everything is more expensive than expected
- You can’t DIY everything
- Unexpected, often expensive, problems can come up
All three of these things point to needing more money than you expect. Unfortunately, buying a home can clear out a lot of cash reserves. If people have *almost enough* for the down payment, closing costs, and other costs involved in buying a home, they will often raid whatever cash they have left to push them over the edge.
So once you have bought a fixer-upper, you need to start saving ASAP. Cash on hand can help you sleep better and make more rational decisions when faced with potentially expensive home issues.
Even if you already have a healthy emergency fund, having money in stocks that you can sell if needed can be powerful. We’ve had years to build our savings up so I realize this won’t apply to everyone, but through participating in my employer’s stock purchase program we have a decent amount of stock we could sell if needed. We could technically sell our stock tomorrow and get a new deck built, but having those extra liquid assets is more important to me than having an expensive project checked off the list.
Decide What You Care About
Unless you have enough time and cash to renovate your entire fixer-upper right away, you need to decide what you care about. For example, our kitchen is still the late ’70s model that is just begging to be ripped out and replaced with some new white shaker soft close cabinets. But we knew that replacing our renter’s kitchen and our bathroom were higher priorities, so we’ve put off the upstairs kitchen for now.
Money obviously comes into play. You could care a lot about something – like a kitchen renovation – but the $30k price tag may make you reconsider. Spending a few grand on making your yard nicer may vault up your priority list.
Said differently, finding what you can and cannot tolerate is helpful. The old bathroom and the nasty carpet we had in the house gave me anxiety, so they were far up on my priority list. The ’70s kitchen, while not nice or practical, is “okay” for now.
Think About What You Will Do If Plans Change
One piece of advice that is often given to those considering switching from renting to owning is that you should be certain you will be staying in the same place for at least five years, otherwise you should keep renting. I generally agree with this advice, but let’s be honest: things change.
Think about what you would do if you had to quickly sell your house. This is definitely something I wish I had thought about more before buying our fixer-upper. I think we’d have trouble renting it without doing some bigger renovations, like flooring and bathroom, so we’d likely have to sell. We wouldn’t have much negotiating power, though, since we would have made few upgrades in that time.
Reflecting on what you will do if you find yourself in a situation where you need to move out will likely cause you to realize the more cash you have, the better. Whether that means putting off purchasing a home or still purchasing the home but saving aggressively will be a highly personal choice.
Learn As Much As You Can
Blood, sweat, and tears come with a fixer-upper. Projects can be intimidating and you may be scared to do something wrong. For example, it’s easy to think “I don’t want to tile the floor myself because I have never tiled so it may not look great.” But if you don’t tile the floor of your fixer-upper, when will you ever tile a floor? It’s better to take the plunge and learn the skill. Worst case scenario you have to start over, but at least you will learn a lot in the process.
Some people learn home-related skills growing up, but I have a hunch that a large majority of people didn’t. Whether they lived in a home that was already updated, or their parents never taught them, or they lived in a rental, there are many reasons why someone wouldn’t have learned home renovation skills. A fixer-upper is an opportunity to learn.
Yes, the main value in a fixer-upper is the increased value of the home, but I think the skills you learn throughout the process are also really valuable.
Completing Big Projects Feels Really Fricking Good
Building a 40-foot retaining wall was ridiculous and I’m not sure I would do it again. If I did, there’s no doubt I would outsource certain aspects of the project like having the dirt hauled off. Regardless, it feels really fricking good to know that I finished a big project and saved over $10k in the process.
I have a similar feeling about the flooring, trim, and doors in our house. It was a big project that was time-consuming, but it feels really good knowing that I went the DIY route. Back to the topic of learning, the project started slow as I got used to using a miter and table saw and the general process of laying flooring, but by the end of the process I was going much faster. It feels great to know that the next time I have a flooring project I can take it on with confidence.
A Fixer-Upper is *Probably* Worth It
The biggest question people have who are considering a fixer-upper: was it worth it?
I am just a single example so you have to take anything I say with a grain of salt, but I think in most cases a fixer-upper is probably worth it. I say probably because there will always be those examples where it was more hassle and more costs than it was worth it. If you are going into it with your eyes open, realizing that there are unexpected costs and inevitable frustrations, it probably is worth it.
Besides the expenses that will come up, the biggest warning I would give is the time commitment. I really struggled – and continue to struggle – to find time to work on our house. Everyone is busy these days, so it’s not easy to carve out hours and hours to work on a fixer-upper. You almost have to think of it as a side hustle in the sense that by doing work yourself and not purchasing a turn-key home you are saving money that you ultimately will get back when you sell the house down the road.
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Love this list of lessons from your fixer-upper. We have not tackled this type of extensive project, though we (my husband really) managed our apartment kitchen and bath renovations. Even then, we outsourced all of it — the risk of learning on the job was too great given the potential for damage. But we are both not handy.
I loved your point about delaying — another advantage of this (other than saving) is that you get a better sense of what you really want and need. That said, I wish we had done our bathroom much sooner. We knew we wanted it done, and we put up with it longer than we should have. There are always tradeoffs!
The delay versus not-delay argument is a big one! I tend to push both myself (and others) towards delaying mainly because I think HGTV and other content out there really makes it seem like your life isn’t complete unless you renovate everything. In reality, it’s perfectly fine to put off a big renovation for years and focus on other financial goals. We could have easily poured $100k+ into our house as soon as we closed on it, but it didn’t make sense. We still have at least $50k in renovations, perhaps more, to do, but every year I delay them I think about those $ going into index funds instead and building over time!