by Dell Claiborne
My sister and I are considering buying a house together. Which type of house is the better investment? I say it’s a new home. My sister says we should look for an existing house, here treat even a “fixer upper”. Dell, who’s right?
Like everything, there are pros and cons to both. This decision may come down to a matter of personal preference. I’ll begin by saying that real estate is great investment and like all investments you want to make sound and informed decisions. Buying a new home is great if you’re looking to just move in. This is a smart decision if neither you nor your sister is very handy or able to do some minor repairs yourselves. In buying new you may also have the opportunity to make some customization decisions and have the house built to suit your vision, unlike with an older home or fixer-upper. New homes are usually located in new developments and as more homes in the neighborhood are sold, in most cases, the values will increase. In our current market, the increase in value is happening at a slower pace than in recent years. In most cases new homes are more expensive than fixer-uppers and this may also influence the decision to buy new or go with a fixer-upper. The best thing about fixer-uppers or older homes is usually the price. They’re older homes and usually require some work and are priced accordingly. So in buying an older home that needs work, you are more likely to save on purchase price, but those savings can be eaten away in needed repairs. It is always important to have any property you plan to buy inspected by a professional home inspector. Even if the sellers are not offering to make any repairs, you put yourself in the position of the informed buyer by having the home inspected. I will offer this bit of advice for upgrading a fixer-upper: Don’t get carried away with making the home into your dream home. Remember that the goal of the investment is to sell it at a profit. By making it into your dream home, you are less likely to find a buyer that shares your exact same tastes. So keep your remodeling simple and cost effective.
As you can see there are positives and negatives to both choices. I would say you’re both right, depending on the situation. If you are planning to live in the house, then I say buy new. You’ll be able to live comfortably as opposed to living in a construction site while renovating the fixer-upper. On the other hand, if you and your sister are looking strictly at an investment that you can either flip or rent, then I think a home that needs a little work is the best choice. Hope this helps and good luck with your home search.
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