Best and worst places to buy a fixer upper
Maryalene LaPonsie | Improvement Center Columnist | June 24, 2015
Who doesn't love a deal?
If home renovation shows are to be believed, a fixer upper can be the ultimate deal. All you need to do is find an old home with good bones, pour a little sweat equity into it, and then sell for a profit or live in luxury.
While it's rarely as simple as the shows make it sound, buying a fixer upper can be a good investment. However, some metro areas are better than others when it comes to find the perfect bargain house.
Realtor.com conducted an analysis of 7,000 listings for midsize single homes to determine which housing markets hit the sweet spot of affordable fixer upper home costs and available inventory. They dubbed the difference in price between fixer uppers and comparable homes to be the "fixer-upper discount." ImprovementCenter.com took that data and compared it to information from RealtyTrac on the return on investment house flippers got in those metro areas from 2013-2014.
Based upon that, here are five best cities for fixer uppers and five metro areas where buying a move-in ready house may make more sense than having to use your Pinterest board of creative remodel ideas. Median prices are based upon data from the National Association of Realtors and housing website Trulia.
5 best cities to buy a fixer upper
- Median price: $204,900
- Fixer-upper discount: 54%
- ROI: 84%
Philadelphia is a fixer upper hot spot. Not only can you save up to 54 percent off the cost of a home by buying one in need of a little TLC, flippers in the area also saw a huge return on their investment last year. That means money spent on a fixer upper in Philly may be money well-spent.
- Median price: $223,100
- Fixer-upper discount: 20%
- ROI: 69%
Houses cost a little more in Baltimore and you won't get the same discount as you would in Philly, but the largest city in Maryland can still be a great place to buy a fixer-upper. Flippers in the area saw a 69 percent return on their investment last year.
Baton Rouge, LA
- Median price: $177,200
- Fixer-upper discount: 50%
- ROI: 30%
Head south to Baton Rouge for deals in Louisiana. Housing prices are already lower there, and you could get an additional 50 percent discount if you opt for a property that needs some love. ROI for Baton Rouge is lower but still a not too shabby 30 percent.
- Median price: $186,000
- Fixer-upper discount: 38%
- ROI: 33%
As part of the Orlando metro area, the housing market in Seminole is hot. You can save nearly 40 percent by buying a fixer upper, and flippers earned a 33 percent gain on the money they invested in these properties from 2013-2014.
- Median price: $158,000
- Fixer-upper discount: 60%
- ROI: 13%
The ROI on houses purchased in Fulton County, Georgia are nothing to write home about. But those shopping in the Atlanta metro area will find low prices and a whopping 60 percent discount available if they choose to the go the fixer-upper route.
5 worst cities to buy a fixer upper
- Median price: $278,600
- Fixer-upper discount: 2%
- ROI: 13%
Prescott has a lot of things going for it, but fixer-uppers is not one of them. Houses are already expensive in the city and the discount for buying a fixer-upper is virtually non-existent.
- Median price: $289,400
- Fixer-upper discount: 6%
- ROI: 54%
Based upon last year's ROI, you may think Portland ended up on the wrong half of this list. However, that number may have more to do with the hot housing market in the city rather than a reflection of the great deals flippers are scoring. With the NAR calculating a mere 6 percent discount on fixer uppers, you may be better off buying a move-in ready house and enjoying the appreciating values of the region without enduring the inconvenience of a renovation.
- Median price: $281,000
- Fixer-upper discount: 10%
- ROI: 28%
Like everything in California, housing prices in Riverside are on the high end. Flippers did get a 28 percent ROI last year, but you only save 10 percent by buying a home in need of a reno.
Hilton Head Island, SC
- Median price: $315,000
- Fixer-upper discount: 13%
- ROI: 16%
Hilton Head Island is not where you go to buy a cheap house. The median price is $315,000, but if you want a midsized house between 2,000-3,000 square feet, prepare to fork over $433,000. Fixer upper houses that size aren't much cheaper.
Los Angeles, CA
- Median price: $434,700
- Fixer-upper discount: 16%
- ROI: 36%
If we gave an award to the city with the most expensive fixer-uppers in the country, it would go to Los Angeles. To buy a 2,000-3,000 square foot fixer upper in the City of Angels, expect to spend around $650,000. Sure flippers got a 36 percent ROI last year, but you might be able to buy six fixer uppers in Philadelphia for that price and make twice as much off those.
Photo credit to Kevin Irby