Considerations When Investing in Fixer Upper Vacation Rentals

Considerations When Investing in Fixer Upper Vacation Rentals

The low asking price for holiday properties that need work might be alluring to potential purchasers. Nothing is alluring than a good purchase with the prospect of future rental income. Fixer-uppers are only sometimes what they seem, as you should be aware if you’ve ever watched a home renovation program.

When it comes to making money from a vacation rental that needs work, the road to success can occasionally be lengthy. You can take a few steps before buying a property that needs work. To help you make the best possible investment choice, we’ve detailed all the key factors to consider when buying a fixer-upper home to use as a vacation rental.

Pros and drawbacks of purchasing a vacation rental that needs work

If you’re new to investing in holiday rentals, you’ll want to completely comprehend what it takes to buy a vacation rental that requires significant modifications. No amount of HGTV will adequately prepare you for the time, money, and effort required to undertake a fixer-upper job. We’ll go over all the key considerations and typical problems of buying a house that requires extensive renovations so you’re ready for any roadblocks you could encounter as you work to transform a fixer-upper into a fantastic holiday home.

Added expenses

What is the main disadvantage of fixer-uppers? You probably guessed it: unstated expenses. Fixer-uppers are frequently quite worn, whether as a result of neglect or regular aging-related decay. The biggest problem is that these costs might appear in unexpected areas. It can be very expensive projects, such as replacing the drywall, draining the sewage system, or even repairing structural damage. The construction itself is different from where hidden costs begin and stop. According to Newcastle Permanent, the top five unexpected costs are as follows:

  • unforeseen costs
  • Making a poor financial decision
  • Making a change of heart while renovating
  • Unexpected problems and issues
  • Considering staying (or renting) on the property

When purchasing a vacation rental that needs work, make sure you have money set up to cover any unforeseen expenses, such as additional fees or unexpected building expenditures.

Higher expenditures for upkeep

Let’s talk about maintenance expenses while we’re talking about costs. Unfortunately, even once the renovation is finished, the expenditures persist. The same can be said for homes that are ready for immediate occupancy. However, fixer-uppers occasionally have higher utilities and upkeep expenditures.

Why? Consider insulation as an illustration. When remodeling a home built in the early 1900s, you’ll encounter insulation, drywall, windows, and enclosures that are more than a century old. Your investment in the historical value will undoubtedly be worthwhile (more on that later), but you must account for a higher cost of heating and cooling a room with outdated insulation. Expect increased monthly costs as well unless you have plans to gut the house completely.

Limitations on historic or new construction

A fixer-upper will often have an older construction. This might be a fantastic benefit for your company! Many owners of vacation rentals include the words “historic,” “retro,” or “restored” in the descriptions of their properties. Your business will benefit greatly from having a historic vacation rental, which will allow you to raise your daily average rate.

Many communities take this seriously. To ensure that historic structures retain their original integrity, several towns have rigorous reconstruction rules and preservation guidelines to follow. Make sure you have the required permits before beginning renovations on a historic structure, even if it’s just a typical fixer-upper or if it’s just a regular fixer-upper. It may be necessary to stop building, face legal ramifications, or pay hefty fines if you don’t follow local renovation regulations.

The first period of vacancy

Don’t expect to get started immediately because fixer-uppers take a lot of time to complete and are expensive. The time it takes to finish the restoration and make the space guest-ready could be months or even a whole year.

Because there is an existing structure to consider, renovations can be a little trickier than regular construction. Expecting to be able to host visitors after a few weeks is unrealistic. Fixer-upper renovations can take a while to complete and must be finished before visitors enter the property.

You can still begin to create a buzz right away! Before you open the doors, promote your resort to generate interest among possible guests. Make a Facebook “coming soon” countdown clock or Instagram stories tracking the development of your makeover. Make the most of the empty period by preparing visitors for your future residence.

The benefits of buying a home in need of repair to use as a vacation rental

It’s possible to purchase a vacation rental that needs work. Purchasing a property like this as a vacation home has several advantages. Most of the difficulties will arise when you renovate, after which you may get ready for a more passive income as your fixer-upper starts to generate cash.

the capacity to develop and customize

The creativity is already taken care of for you when you purchase a vacation home that is ready to move into. There isn’t much room for you to add your unique touches because the floor layout, paint, fixtures, and appliances are all in place. Fixer-uppers are unquestionably best suited to creative types. This project may be right for you if you’re willing to tear down some walls, start over, and add some unique touches.

The cost is

The price tag has the most allure. You’ll pay a lot less for a fixer-upper than you would ordinarily for a rental home. Of course, you will pay for what you don’t buy with energy, effort, and time, but keep in mind that these costs may still be less than what you would have paid for a pre-built house.


Every one of us has an interior decorator who makes a fixer-upper pretty appealing. A fantastic benefit is an ability to remodel a home entirely to your tastes for only half the price. Every nook, arrangement, and space can be altered to match your possible vacation rental theme properly.

Even though it seems like a pleasant project, remember that you will be playing a lengthy game. Fixer-uppers demand a significant amount of labor, effort, and funds. Owners of holiday rentals can become so engrossed in the renovation process that they spend more on the house in need of work than they would on a completed one!

Like any other type of vacation rental, a fixer-upper may require more time to make a profit. Make sure you account for the fact that the house will need to lie empty for the first several months following the original purchase in your budget and projected costs. Using our worksheet for short-term rental expenses, you may calculate all the costs associated with your renovations.

Make sure you have a comprehensive plan if you intend to take on a fixer-upper. Although renovating a property might be labor-intensive, the results are worthwhile. You’ll be one step closer to rebuilding the vacation rental of your and your visitors’ dreams if you include the rebuild in your overall business plan for holiday rentals.

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