Turnkey vs. Fixer-Upper: Pros and Cons
The beauty of real estate is that different properties satisfy different needs. Although single-family homes are great for putting down roots, that may not be your motivation for purchasing your next home. If you’re looking to buy a property with the intent of renting it, both turnkey and fixer-upper listings will cross your path during your home search. The main difference between the two is the condition of the property when you buy it. The right one for you depends on your needs as a homeowner and your goals as a landlord.
What is a turnkey property?
Turnkey properties are move-in ready from day one, which means they’re ready for you to rent them out immediately. Whether it’s a new construction home or a recently remodeled listing, these properties are in tip-top shape when they hit the market. Companies that specialize in renovating and selling these properties may also offer property management services, which may appeal to you if you’re looking for a more hands-off approach to managing your investment property.
What does fixer-upper mean in real estate?
Compared to turnkey listings, fixer-uppers are on the opposite end of the investment property spectrum. Buying a fixer-upper means you’re purchasing a home that needs repairs, remodeling, and some major TLC before it’s ready to rent out. These properties are diamonds in the rough; you’re betting on your ability to make high ROI home upgrades that will attract future renters and put money in your pocket.
Turnkey vs. Fixer-Upper: Pros and Cons
Turnkey Pros
Because they are move-in ready, turnkey listings have the potential to generate cash flow right away. Without any pending renovations in your way, you can open up the property to renters as soon as you take possession. They’re primed and ready to place in the hands of a property management company, which means you’ll get passive income without having to deal with day-to-day operational tasks. You can also ask the listing agent for permission to use their photos, which can help your rental stand out amongst the competition in your area.
Turnkey Cons
So, what’s the catch? These benefits all come at a cost; turnkey properties typically cost more than fixer-uppers. You’ll pay a premium for the pristine condition and the buttoned-up appearance of these properties, so it’s important to have a strategy to save money for your home purchase. Also, handing off property management duties to a third party means you’ll have less control over the renting process. For more information on whether hiring a property management company is right for you, read the following blog post:
Fixer-Upper Pros
Searching for homes in less-than-pristine condition can give you a leg up as a buyer. Fixer-upper homes tend to have less competition from buyers than turnkey properties, since not everyone is willing to take on a major remodeling project. Talk to your agent about how to make the best offer. Given their lessened condition, you can oftentimes get a great deal on these homes with the right strategy. And the best part is, your remodeling efforts will increase the home’s value over time. The more effort you put in, the more the property will be worth, which means higher ROI potential.
Fixer-Upper Cons
Here’s the downside with fixer-uppers: tapping into their potential requires pouring money into the property. Exactly how much you can expect to spend on a fixer-upper varies by location, the size of the home, and the scope of repairs and renovations needed. Tackling some remodeling projects DIY can save you money, but if certain projects require more skilled hands, it may be best to hire a professional. And for all your planning, it’s impossible to predict the future. Projects may go over budget, material costs may rise, and the market may look completely different when you’re ready to rent out your property than it did when you bought it. For more information on buying a fixer-upper and the special financing options available to you, read the following blog post:
Your real estate agent is your greatest asset in helping you determine which property type is right for you. Connect with a local Windermere agent to see which turnkey and fixer-upper properties are available in your area:
May 2023 Market Insights
May 2023 in Stanwood and Camano Island, the current combined inventory is higher than it was at the same time last year, with a total of 105 active residential listings at the end of May 2023 as compared to 88 last May (a 19% year over year increase). Even with this, our markets still have tight inventory remaining firmly in a Sellers’ market with about 1.9 months’ supply of inventory. At the same time, we have seen decreases in new listings added to our markets, with 87 added in May 2023. That is 38% less than added last year at this time.
Buyers are still being selective in their purchases, with changes in lifestyle needs motivating the majority of moves. Our market prices peaked in April/May of 2022. And we saw a steady decline in average prices in the latter part of last year. In 2023, we are seeing a slow but steady recovery growth in sales prices, pending and closed sales.
New Listings: We saw 87 new listings added to our inventory last month, 45 on Camano Island and 42 in Stanwood. This is significantly less than the 120 added at the same time last year.
Pending Sales: Year-over-year Pending sales for May have dropped by 37%, from 89 last May 2022 to 65 last month. But, month to month, we are up over a 20% increase from last month when we saw only 54 listings go pending.
Properties Sold: We had 49 sales closed in our market last month, compared to 74 last year at the same time. We have seen that number consistently increasing month over month during 2023.
Sale Price: Average sales prices of properties sold in Stanwood and Camano Island have increased in the month of May. They are $637,492 in Stanwood and $724, 336 on Camano Island, up over 14% since the beginning of the year.
As inventory increases month to month, so does the competition for your home sale. Take advantage of pent-up buyer demand and a sellers’ market by getting your home on the market now. Remember that all we can control when selling a home is price and condition. It is still important to price your home appropriately and get it market ready so it will shine against its competition.
Based on our month to month increases, buyers waiting for prices to come down will be disappointed based on current trends. The time to buy is now before prices rise further. We have a higher inventory available for buyers to choose from than we have had in over two years. With over 100 homes available in our two combined zip codes, you are more likely to find the perfect home for you.
At Windermere, our responsiveness to the local market, dedication to the community, and commitment to our trade is why we help our clients buy and sell more real estate in Stanwood and Camano Island than any other company.
We are all in, for you.
Jill Vail
REALTOR®
Owner, Designated Broker
Windermere Stanwood & Camano Island
jillvail@windermere.com
360-387-HOME
Jill Vail
REALTOR®
Owner, Designated Broker, Windermere Stanwood & Camano Island
360-387-HOME
.
Jill Vail
REALTOR®
Owner, Designated Broker, Windermere Stanwood & Camano Island
360-387-HOME
.
February 2023 in Stanwood and Camano Island showed upticks in new listings and pending sales compared to January. Based on the activity, it appears that a degree of balance is returning to the market.
New Listings: There were 66 new listings added to inventory last month, 38 in Stanwood and 28 on Camano Island. This is only 1% fewer than 12 months ago.
Pending Sales: Volume of pending sales increased 14%, from the year-ago total of 51 to 59.
Homes Sold: Year over year closed sales declined 22% from 47 to 37 transactions.
Sale Price: Average sale prices in Stanwood and Camano Island slipped 10% and 17% respectively from last February.
SELLERS – There will most likely be a shortage of inventory this spring, but the Buyers are out there! Multiple offers are being seen on the right properties despite the interest rates. Price is important. If you are thinking of listing your home, meet with your local agent to discuss market value and additional value they can bring.
BUYERS – Get pre-approved for a mortgage now. This will give you a better idea of your budget and price range to focus on. Be patient! The current market is still a bit competitive, so it may take some time to find the right home at the right price. Hire a local agent who knows this area and market well.
At Windermere, our responsiveness to the local market, dedication to the community, and commitment to our trade is why we help our clients buy and sell more real estate in Stanwood and Camano Island than any other company.
We are all in, for you.
.
Marla Heagle
REALTOR®
Managing Broker, Windermere Stanwood & Camano Island
360-387-HOME
.
Matthew Gardner, Windermere’s Chief Economist, joined us at the Camano Center where he delivered his 2023 forecast for Stanwood and Camano Island. He provided an in-depth look at the local market and highlighted key trends that will impact the area’s housing market over the next few years. His forecast provided essential insight into where Camano Island’s real estate industry is headed – and what potential buyers and sellers need to know.
In the current economic climate, the cost of living can be a significant burden for many. However, recent developments are suggesting that inflation might be on its way down across the board. This is in part due to falling gas prices, which have decreased dramatically over the last few months. According to Gardner, this trend is heading in the right direction; however, it isn’t happening as quickly as consumers would like.
“I contend that the FOMC waited too long before starting to shift their policy stance and that they will continue aggressively raising rates for longer than necessary due to inflation, which will likely result in a recession,” Gardner went on to say, “The Fed is still willing to risk a recession to bring inflation to heel and a “modest” contraction is now baked into economists’ forecast”
What does this mean for our local market in Stanwood and Camano Island?
“Rates averaged 3.11% in 2021 but the Fed withdrawing much of their support led them significantly higher – peaking at over 7% in 2022 before starting to yield” Gardner shared, “I believe that rates peaked last quarter with inflation slowing and bond yields pulling back rates will slowly trend lower as we move through 2023.”
But Matthew Gardner isn’t the only one to predict this. When comparing his predictions with those of other analysts’ expectations no one is predicting rates to rise further with their end-of-year mortgage rate predictions ranging from as low as 5.2% up to 6.4%.
When looking at sale prices on homes in our communities Gardner expects prices to reduce. Buyers are again negotiating and sellers must adjust to that shift in the market. Although there has been a pullback in those prices Gardner cautions us not to worry but to recognize that the prices are correcting after the artificial conditions created by the pandemic. “Prices are correcting but are unlikely to fall much further before they start to stabilize and then returning to the long-term trend in price growth,” Gardner shares.
“I expect that 2023 will be a year of transition,” Gardner concluded. “It may feel rough, but this is actually a good thing and will allow a more stable market to return!”
At Windermere, our responsiveness to the local market, dedication to the community, and commitment to our trade is why we help our clients buy and sell more real estate in Stanwood and Camano Island than any other company.
We are all in, for you.
Take a look at Matthew Gardners Recent Blog: 2023 Real Estate Forecast: Why This Market Won’t Be Like 2008
By Evan Caldwell | Jan. 29, 2019
Stanwood, Wash. – Economic growth doesn’t come without some burden.
“We are suffering from our own successes,” said economist Matthew Gardner. “We have a robust economy, and that means growing pains.”
The solid economy equates to more jobs — and more people — moving to the region, putting continued pressure on infrastructure and housing markets, he said. Gardner spoke about the national, state and local economic past, present and future to about 250 people at an economic forum Friday, Jan. 24, at the Camano Center.
“If you want a job, you can certainly find a job,” said Gardner, citing Snohomish County’s low 2.5% unemployment rate. “And jobs and income growth should increase this year.”
Snohomish County continues to be one of the fastest-growing counties in the nation. By 2025, an estimated 250,000 people are predicted to join the 800,000 already living in the county, according to estimates by the state Office of Financial Management.
However, finding affordable places to live is the current challenge, said Gardner,
Gardner is the chief economist for Seattle-based Windermere Real Estate and also sits on the Washington Governor’s Council of Economic Advisors. He chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington and is an advisory board member at the Runstad Center for Real Estate Studies at UW, where he also lectures in real estate economics.
“People are coming, that’s for sure, you can see it in the housing demand,” he said. “We need to be building more homes.”
In the Stanwood and Camano ZIP codes of 98292 and 98292, the number of new listings per month continued a steady downward trend in 2019, according to Northwest MLS data. In December 2019, there were 129 homes for sale in the area, down from 148 in December 2018.
Prices have climbed. The average median price for a home in Stanwood increased to $443,000 in 2019 from $430,000 in 2018 and $389,995 in 2017, according to Northwest Multiple Listing Service data. On Camano Island, the median cost of a home rose to $434,000 in 2019 from $410,000 in 2018 and $394,975 in 2017.
“Because inventory is so tight, housing prices will continue to rise in 2020 .. and it could be a very tight market for a very long time,” Gardner said. “So, why aren’t there more homes for sale? They’re living in them longer and moving less frequently for jobs.”
Americans nowadays are staying in their homes for about eight years before moving – up from four years from 2000-09, according to Attom Data Solutions, a real-estate data firm.
In addition to newcomers, millennials are starting to enter the housing market, adding increased pressure in the first-time homebuyer category, Gardner said. Even the few hundred new homes and about 150 new apartment units planned to be built in Stanwood in the next few years are insufficient to meet demand, Gardner said.
“To better compete, we need to create housing people can afford to live in — the teachers, the firefighters,” he said. “And certainly cities will need to address infrastructure needs, and governments will need to work on mass transit options.”
However, several factors can stymie new home construction, such as cost of land and materials, permitting constraints and an expensive construction workforce. In Snohomish County in 2019, there were 2,221 permits to build new single-family homes, down from 5,719 permits in 2005. On Camano in 2018, there were 375 permits for new home construction, down from a high of 752 in 2005.
Gardner said the U.S. economy is due for a minor recession in the coming years. The U.S. was last in recession from 2007-09.
“We might have a recession in 2021 in some segment of the economy, but it’ll be OK; it’ll be modest,” Gardner predicted, citing data showing major companies slowing the pace of hiring in the run up to the presidential election. “What do companies do when they’re worried? Nothing. Like a deer in headlights, they freeze, they’re being cautious.”
This article was originally published on goskagit.com.
By Evan Caldwell | Jan. 15, 2019
Stanwood, Wash. – Matthew Gardner returns with his crystal ball to peek at what 2020 holds for the local economy and housing market.
Gardner, the chief economist for Seattle-based Windermere Real Estate, is the keynote speaker for the 2020 Economic and Housing Forecast community forum 6 p.m. Friday, Jan. 24, at the Camano Center, 606 Arrowhead Rd. on Camano Island. The forum will take a macro and micro look at the economy, the economic forecast and housing.
“In 2020, I expect payrolls to continue growing, but the rate of growth will slow as the country adds fewer than 1.7 million new jobs,” Gardner wrote in his 2020 forecast last month. “Due to this hiring slow down, the unemployment rate will start to rise, but still end the year at a very respectable 4.1%.”
Gardner, who spoke to a packed house at last year’s event, wrote “many economists, including me, spent much of 2019 worried about the specter of a looming recession in 2020. Thankfully, such fears have started to wane.”
The forum is free and open to the public, but reservations are required. Call 360-387-4663 or visit windermerestanwoodcamano.com/2020-forecast. Doors open at 6:30 p.m. for a cocktail and appetizer hour, followed by Gardner’s presentation and then a question-answer session with the audience.
This article was originally published on goskagit.com.
