Buying a fixer-upper is a financial and emotional investment. Compared to purchasing a renovated home, there are far more unknowns: the price may be lower, but the costs and complications could escalate. That’s one reason the average number of offers made for fixer-uppers halved from six to three between 2022-23 — while buyers anxiously waited for a recession that never happened.
But when that investment pays off, it can pay off big time. The average return on investment on buying a fixer-upper was 27.5% in 2023. The satisfaction and lifestyle improvements that come with improving a home to your tastes and requirements are immeasurable.
There’s another good reason to opt for a fixer-upper right now: housing inventory is extremely tight and competition for renovated homes is high. “A fixer-upper solves a couple of problems,” real estate agent Kevin White told the Washington Post. “First, a house that needs some work is usually priced 5 to 10 percent below comparable homes. Second, you eliminate a lot of competition because lots of buyers only want move-in-ready homes.”
If you’re considering buying a fixer-upper to renovate, it’s good to have a ballpark idea of the likely costs and recoupments — and how location can affect them. Following our guide to the price and availability of renovated and fixer-upper homes, we have now calculated the cost and added value of renovating fixer-uppers around the U.S.
Behind This Study
The data team at Frontdoor obtained the median size and price of homes listed as a ‘fixer-upper’ on Zillow in America’s biggest cities. Then, we used Kukun’s home remodeling cost estimator to find the likely cost, added value and profit margin of renovating each main room of the home relative to the median size and price of a local fixer-upper home in each city.
Key Findings
- Miami, FL, is the most profitable city to renovate a fixer-upper, with an estimated return-on-investment of 17.67%.
- Billings, MT, is the city with the lowest ROI when renovating a fixer-upper, only 10.98% value added to the property when considering the cost of renovations.
- Fixer-uppers in Toledo, OH, gain an average of 65.82% in value following renovation — the most of any large U.S. city.
- Installing semi-custom cabinets to the kitchen is the DIY improvement that makes the biggest difference to the price of a fixer-upper after renovation, averaging a value increase of 3.63% (or $7,510.00).
The Most and Least Profitable Cities to Renovate Fixer-upper Home
The most profitable cities to renovate tend toward the coast, particularly the West Coast, with six Californian cities among the top ten. For example, in Los Angeles, renovating the average fixer-upper costs $79,610 but it can leave homeowners a profit of 17.19%.
At the other end of the scale, the least profitable territories for renovation tend to be (more or less) landlocked and towards the Midwest or East of the country. Billings in Montana has the lowest return-on-investment (10.98%).
The U.S. Cities Where Renovating a Fixer-upper Home Adds the Most Value
The increase in median home value when renovating a fixer-upper varies significantly. Toledo, Ohio, is way ahead with an increase of +65.82%.
The industrial Midwest is a particularly fruitful region to flip a home. The top cities in Ohio, Michigan and Illinois offer a >50% markup on renovated fixer-uppers. These cities are dotted with vacant or borderline derelict homes, which may take on a new lease of life as neighborhoods undergo regeneration.
The increase in median home value in Toledo is nearly 8% higher than in second-placed Detroit. Zillow rated Toledo as the second-best metro for first-time buyers in 2023, with mortgage payments the lowest (as a proportion of income) among Zillow’s other choices. Since house prices are so low, it’s possible to turn around a major property and sell it at the premium end of the market: one study found that while the estimated size of a $400,000 home in Toledo is 4,444 square feet compared, for example, to just 452 square feet for the same priced property in San Jose, California.
The Renovations That Add the Most Value to a Fixer-upper Home
Next, we looked at the tasks that add the most value to a fixer-upper.
Cabinet doors cover a lot of visual ground and make an instant impact; Zillow notes that pewter or deep graphite gray are the most profitable colors for kitchen surfaces, perhaps because they suggest cleanliness without the anonymity or ‘rental feel’ of white or magnolia.
On the average fixer-upper, that +3.63% profit on new kitchen cabinet doors equates to $7,510. Ranking number two on the list is another kitchen improvement: replacing mid-market branded appliances with high-end options. Revamping your kitchen appliances could lead to an increase of +2.35% in property value. Replacing the counters, faucet and sink can have a smaller but significant effect.
In the bathroom, individual renovation tasks such as installing a shower or tub surround and replacing a sink and faucet add less than +1% in home value each. But this can still mean a four-figure sum — and it all adds up.
The Added Value from Renovating Fixer-upper Homes in Major California Cities
Stockton is California’s most profitable market for fixer-uppers, with an average increase in median home value of 17.19%. Second-placed Fresno is not far behind, at 14.94%. These make attractive markets for home flippers, with property reasonably priced, at least by California standards — Fresno is among the big cities where flipping is most common.
Soaring rental costs also make fixer-uppers an appealing prospect in California cities with moderate purchase prices. More expensive markets offer a lower percentage but a grander sum total: San Francisco is among the best locations for gross profit on renovations, according to the National Association of Realtors, despite delivering a relatively low premium of 8.45%.
The Added Value from Renovating Fixer-upper Homes in Major Florida Cities
St. Petersburg (20.89%), Tallahassee (19.46%) and Miami (19%) are the best bets for a big increase in median property value for a Florida fixer-upper. In St. Petersburg, renovators have a rich source of older homes to turn around in the Historic Kenwood area, with a particular concentration of Craftsman bungalows that benefit from either restoration or stylish modernization that plays with the period details of the home.
In Miami, you may be more likely to flip a mansion. Rap mogul Rick Ross is plunging an astonishing $20 million into a home he picked up for $35 million; Vanilla Ice turned his staircase into a fish tank. In the Miami-Fort Lauderdale-West Palm Beach metro, an astonishing 7.6% of sales were restorations across 2022.
The Added Value from Renovating Fixer-upper Homes in Major Texas Cities
Laredo, with a 27.89% increase in median home value, takes the top spot as the highly profitable renovation hotspot in Texas. The “Gateway City” leads a trio of big hitters in the state, ahead of Lubbock (21.31%) and Corpus Christi (21.25%). The Dallas Business Journal labeled Laredo the “Flip Capital of Texas” in 2020, after 9.5% of sales were renovations.
Texas maintains a healthy level of renovation fever thanks to the success of the HGTV reality series Fixer Upper, following Waco-based brokers Chip and Joanna Gaines. Waco does not feature in our research due to its size. Still, the Gaineses are a crucial act to watch when thinking about a fixer-upper in the Lone Star State: they have expanded their business into Austin, San Antonio and historic railroad towns, looking to capitalize on the sturdy but unloved 19th- and 20th-century buildings that characterize these areas.
How to Cut Home Renovation Costs
Renovating a home is never cheap, but there are ways to ensure you keep to your budget. Let’s take a look at three ways to do so.
- Keep things where they are
Avoid spiraling costs by fixing and modernizing only what is necessary. Don’t move walls, sinks, toilets, windows and electrical outlets without a very good reason.
- Do it yourself, slowly
If you’re renovating a place to live, your cheapest material is elbow grease. Learn from YouTube tutorials, invite friends for “painting parties” and offer to assist any contractors you hire. As well as saving on labor costs, doing it yourself means you can keep to your own schedule — concentrating on urgent work first and adding the frills when you have time and money.
- Recycle and upcycle
What’s good for the planet can be good for your bank balance. Buy second-hand tools, hit eBay and the thrift shops for furniture, and check Freecycle for people giving away surplus paint and building materials. Bonus tip: Check office resellers — it’s a boom time for offloaded furniture, often of high quality and unused, while America adjusts to the work-from-home revolution.
Buying and renovating a fixer-upper takes a lot of work, but the payoff can be life-changing.
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Methodology
We obtained the median size (sq ft) and median price (USD) of homes listed as a ‘fixer-upper’ on Zillow for the 130 most populated cities in the United States.
Then, using Kukun’s home remodeling cost estimator, we measured the cost and added value of renovating each main room of the home relative to the median size and price of a local fixer-upper home in each city. We focused on costs and renovations with a mid-market budget using a general contractor. This included a price and estimated value increase for specific remodeling and upgrades per room and for the room as a whole.
Cities were firstly ranked on the return on investment (value added to home relative to cost of renovations) for renovating the five main rooms of a fixer-upper home. Cities, rooms and remodeling tasks were then ranked on adding the highest median value (%) to the median price of a fixer-upper home on a local and national level.
This data analysis was completed in April 2024.
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