Investing In A Fixer-Upper: How Likely Are You To Make A Profit?

When you decide to buy a fixer-upper, you’ve probably got a picture of the future in your head. You’re going to renovate and redecorate, get the home into a properly livable state, and then put it on the market and wait for interested buyers to come flooding in. 

How could they not? You’ve put a lot of time and effort into the project! But not all fixer-uppers are actually profit markers. Some of them are just money pits that’ll drag down your budget year after year. 

And if you’re thinking of becoming a long term property investor, you don’t want this kind of fixer-upper on your portfolio! As such, here’s what to think about when it comes to assessing a fixer-upper’s potential for profit.

It Depends on the Size of the Property

On average, it’s the small to medium sized fixer-uppers that have a good profit potential. Large properties that have a lot of damage are usually just too expensive to see any healthy return on. 

If you’re going to invest in a home that essentially needs to be ripped out and replaced, you’re going to want to keep the overall square foot on the lower side! 

It Depends on How Much of the Work You Can Do Yourself

DIY renovations take a bit longer, but they can be much cheaper at the same time. Of course, if you run into any trouble with trying to fix up a house by yourself, you’ll have to pay out for repairs. 

But there’s no saying that this will be more expensive than if you just called the professional in the first place. That’s what makes it so hard to say whether or not you should hire or just attempt DIY wherever you can. 

In our mind, if you can complete 50% of the renovation by yourself (or with a team of DIYers), you’re likely to see a good return on the other side. But it’s typically a good idea to have one professional on call too, just in case you need an expert eye.

It Depends on What You Need to Repay

A lot of fixer-uppers are bought at auction, and mortgage availability for them is often close to non-existent. That’s why many buyers turn to auction finance bridging loans, to help them go into the auction with the hope of placing a winning bid. 

However, make sure you understand the terms of the bridging loan you’re working with, especially if you’re also interested in looking into mortgage approval in the long term. If you need to repay both, you’re looking at a hefty monthly sum here – and interest can accrue at a pretty high rate. 

Investing in a fixer-upper can be a great idea! If you want to buy a house, do it up, and then either rent or sell it on at some point, this kind of project will be what you’ve dreamed of. But if you’re taking investing seriously, you’ll need to be more careful.

FAQs: Investing in a Fixer-Upper

1. Are fixer-uppers always profitable?

No. Profit depends on factors like purchase price, renovation costs, property size, location, and market conditions. Some fixer-uppers become profitable investments, while others turn into costly money pits.

2. How do I know if a fixer-upper has good profit potential?

Look for smaller or medium-sized homes needing manageable repairs, compare renovation costs to the expected resale value, and research sales prices for similar renovated homes in the area.

3. Should I renovate a fixer-upper myself or hire professionals?

DIY can save money, but only if you’re confident in your skills. Most investors benefit from a mix: doing simple tasks themselves and hiring professionals for structural, electrical, or plumbing work.

4. What’s the biggest risk of buying a fixer-upper?

Unexpected repairs. Hidden damage—like foundation issues, mould, or outdated wiring—can drastically increase renovation costs and wipe out potential profit.

5. Do I need special financing for a fixer-upper?

Often, yes. Because many fixer-uppers don’t qualify for traditional mortgages, buyers use auction finance or bridging loans. Always review repayment terms carefully, especially interest rates.

6. How much DIY should I plan to do to stay profitable?

As a rule of thumb, completing around 50% of the renovation work yourself (or with a DIY team) can significantly increase profit margins. However, safety-critical work should always be done by qualified professionals.

7. What renovations add the most value to a fixer-upper?

Kitchens, bathrooms, flooring, exterior improvements (kerb appeal), and essential repairs like heating, roof, and electrics typically offer the highest return on investment.

8. How can I estimate whether the property will be profitable?

Use the 70% rule—investors often avoid paying more than 70% of the property’s after-repair value (ARV) minus renovation costs. This helps ensure a healthy margin.

9. How long does it usually take to renovate a fixer-upper?

It varies based on the level of work needed, but most projects take between 3–12 months. Complex structural repairs can extend timelines significantly.

10. What should I avoid when buying a fixer-upper?

Avoid homes with extensive structural damage unless you’re highly experienced, fixer-uppers in slow markets, and projects where repair costs exceed the potential resale value.

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Becky

Meet the award-nominated UK lifestyle blogger behind Spirited Puddle Jumper – a mum of three living in South East London! Becky shares the real ups and downs of family life, parenting tips, and lifestyle inspiration, proving that being a mum doesn’t mean you stop being fun or having other interests! Follow along for honest insights into UK family life and opinions on a whole range of topics, from travel and food, to beauty reviews, home and DIY, business and health and wellness.