For many people, their home is the largest purchase they are ever going to make. As well, the word one receives from most investment advisors is that a house is an asset. After all, a home’s price tends to track inflation, and over the long term it is rare to lose money on a home you sell without being under any duress. But in the case of a fixer upper, you need to be well aware of what you are getting into first.
Some people call it the property ladder. First you buy a small house, get it looking as great as it possibly can, and then sell it for something larger and more luxurious. While your first home might be a tiny little bungalow in the rough part of town, half a dozen homes and a couple of decades later you could be living in something approaching the status of a mansion in an exclusive subdivision. With time and effort, you can do extremely well this way. Then, as you get to retirement age and your children move away, you can downsize into something easy to maintain and cheap to heat.
Of course, the first thing you need to pay attention to is your time horizon. The first and last homes we talked about above are not your first and second, nor likely your first and third. This is a slow and gradual process. In addition to that, you need to be able to figure out your fixing up costs and compare them to the value you intend to extract before you start pouring in money. With care, you can do very well.