Should I Buy A Turn-Key Home Or A Fixer-Upper?
*2339 St. Thomas Street, Listed by Jennifer Gessner and Suzy Lamore
Owning a home is typically an excellent investment. It appreciates over time and gives you equity to finance other loans down the road. Yet, high-interest rates, inflation and low inventory complicate dreams of owning a home. The market and economy also make it difficult for current homeowners to sell and find a new house within their means.
Even in the cooling New Orleans market, buyers like you are looking for ways to save on the most significant purchase of their life. Which type of home will give you the best value for your dollar? Fixer-uppers are popular options, but they require a lot of sweat equity. Would a turn-key home be a better investment for your needs?
The simple definition of a turn-key home is a property requiring no work to make it livable. You can move in, unpack and get to life as usual. The reality spans several situations, so exercise judgment when looking over listings. Turn-key homes are livable but may lack your preferred aesthetics. Sometimes, all you’ll need to do is move in. In other properties, you may need to paint or do more extensive upgrades to improve the home’s appearance.
A fixer-upper requires more work than a new or newly-renovated turn-key home. They also cost significantly less than their ready-to-move-in counterparts. These diamonds in the rough may ma ake initial home ownership more than a pipe dream for some. However, fixer-uppers frequently carry large renovation price tags. the A thorough inspection before a purchase can help you decide if the property suits your needs and budget.
A turn-key home’s higher purchase price brings peace of mind and other benefits.
There’s less lag between signing on the dotted line and moving in with a turn-key home. You won’t have extensive projects keeping you in a hotel or other living arrangement — simply unpack your boxes and start enjoying your new place. You may want to make aesthetic changes like fresh paint, but the house will be livable from the start.
You shouldn't encounter significant issues since turn-key homes are generally new or recently renovated. You’ll know exactly how much you must borrow to finance the purchase.
The world is your oyster with a turn-key home. That may be an exaggeration, but you’ll have more mortgage options with this option than a fixer-upper. Banks and investment groups see these properties as a more reliable option and are more willing to loan you the money you need to make your dream a reality.
Turn-key homes make buying easier, but they’re a more expensive option. You should consider all angles before moving forward.
Since turn-key properties are new or renovated homes, they carry a more substantial price tag. The initial costs can deter or hinder many first-time or veteran buyers. You may be unable to afford the neighborhood or house size you want.
There are no official requirements for labeling a home “turn-key.” Dishonest sellers may use the term to draw you into buying a home that looks great on the surface with shoddy work underneath. You could end up overspending to fix mistakes and half-hearted repairs.
These homes typically have a more cookie-cutter appearance, featuring neutral walls and basic finishes. Any upgrades and personality will be your responsibility. Since your house had a high initial price, you’ll probably have to wait before you can make your desired changes.
*1905 Peniston Street, Listed by Cody Stringer
How To Customize a Turn-Key Home?
If you have wiggle room in your budget, try one of these tips to make your blank slate feel more like home.
Recycled materials like old bricks or reclaimed wood can bring a touch of history and personality to your cookie-cutter house. The brick would make a great flooring option for your laundry room or patio.
Add reclaimed wood beams to your ceiling or as a mantel in your living room. Old wood is stronger than today’s trees since it aged much longer before being cut down. You can use it to improve your house’s structural integrity and appearance.
Most turn-key homes feature bland white or grey walls. They appeal to buyers because they have no personality, allowing you to envision your decor in the space. However, living in an all-white or grey house may not be your cup of tea. Spruce things up with an accent wall or two, or go for the gusto and paint the whole house in your favorite color palette.
Fixer-uppers are much less expensive than turn-key homes, but are there other advantages to consider?
The average fixer-upper in 2022 was 45% cheaper than turn-key properties of a similar size in the same neighborhood. The market in New Orleans is even more buyer-friendly, with an average fixer-upper costing 65% less than turn-key comparables. You’ll pay less since these homes often need extensive and expensive repairs to make them livable.
Though you’ll have to pay extra for renovations and repairs, you can determine the final design. You can change colors, finishes, room arrangements, the kitchen layout and more. After the dust settles, you’ll have a home that looks and feels uniquely you.
Professional house-flippers can attest to the profit possibilities with fixer-uppers. When you buy lower than market value for a home and add your sweat equity, you’ll increase your property value exponentially.
A fixer-upper may look like a good deal initially, but you should review these considerations before jumping on an opportunity.
When you invest in a fixer-upper, your final costs are up in the air. You have to consider the purchase price along with any renovations. Inflation and supply chain issues are making repairs and home projects increasingly expensive. Plus, you may run into unexpected repairs as you rip into the walls and floors.
Since fixer-uppers come with many unknown variables, banks see them as riskier investments. You may struggle to secure a traditional mortgage for the entire amount you need for the purchase price and repairs.
The repairs and renovations you choose for your home take more than money — they take up valuable time. In some cases, you could move in while the work goes on around you. Although, you’ll more than likely need to stay at a hotel or with loved ones until the major projects wrap up.
What To Prioritize When Renovating a Fixer-Upper?
Since you saved money on the initial purchase, you should have plenty of funds to turn your fixer-upper into your dream home. However, it’s easy to get carried away and go over budget when the world is open to you. Use these tips to ground your projects and tackle the most critical tasks first.
Before moving into your fixer-upper, you must ensure it’s safe. Have a third-party inspector give it a thorough once over. At this stage, you must prioritize the house's structural integrity, and the electric, plumbing and heating systems.
Now that you’ve spent a significant portion of your funds on your home’s safety, you can allocate some to improving the functionality. If you had to tear the house down to its studs, take this opportunity to change the floor plan to suit your needs better. Even minor adjustments like adding a kitchen island or knocking out one wall can make a huge difference in livability.
Aesthetics should be your final focus. While this will make the home feel like yours, it’s not as essential as the other items. Tackle these projects when your budget allows.
*3705 Clifford Drive, Listed Brewster Yancey Group
What Is the Best Option for You?
Luckily, the real estate market in New Orleans is in your favor. A buyer’s market gives you the breathing room to decide which type of home makes the most sense for you. Do you have the time and flexible funds to invest in a fixer-upper, or are you willing to pay more upfront for the convenience of a quick move-in?
*Written By Rose Morrison of renovated.com
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