Is a Fixer Upper a Good Idea for a Vacation Rental in St. George?

With so many tourist destinations nearby, parents visiting their kids at the university, and demand from seasonal workers, we can all agree that St. George is a smart place to invest in a vacation rental. If you've decided to buy a St. George property as a vacation rental, the next question is: is it better to buy a fixer upper or a turn key property you only need to furnish?

Each option has its own advantages and challenges, and the right choice depends on your budget, risk tolerance, and long-term investment goals. Let’s explore the pros and cons of both before we get started looking at homes for sale in St. George. 

Pros and Cons of a Fixer Upper

In St. George, you'll find some properties that are considered fixer uppers, ready for significant renovations before being ready to rent. In St. George, this could be anything from an outdated mid-century home that needs a full remodel to a property requiring just cosmetic updates like flooring and paint. While there is quite a spectrum of what fixer upper might mean as far as the time and funds required to get it ready to rent, we will lump all of these types of properties into one category for now. 

The pros of choosing a home that needs renovation before renting could be:

• Lower Purchase Price: Fixer-uppers are usually priced lower than move-in-ready homes of a similar size. This means you could buy in a prime location for less, and location is everything with vacation rentals.
• Higher ROI Potential: Renovating strategically can increase the home’s value and allow you to charge a premium for rentals. If you buy a turn-key property, the price likely won't leave room in your budget for updating in a way that is extra appealing to tourists.
• Customization: When you choose a fixer upper, you have full control over design choices, finishes, and layout changes to optimize the property for vacation renters and maximize appeal.
• Less Competition: Many investors prefer turnkey properties for their quick turnaround, so you may face less competition if you are buying a fixer-upper.

There are some disadvantages to consider, too:

• Higher Upfront Costs: Renovations can be expensive, and costs may exceed your initial estimates. It's rare for a renovation to stay exactly on budget, so keep that in mind as you plan for your projects.

• Delays in Cash Flow: Unlike a turnkey property, a fixer-upper won’t generate rental income immediately. The longer the renovations take, the longer you have to wait to start making money. Make sure you can continue to make the mortgage payments without rental revenue for at least a month or two after the you expect to have renovations complete. 
• Unexpected Repairs: Older or neglected properties often come with hidden issues (plumbing, electrical, structural), which can cause unexpected costs and delays, so plan accordingly.
• More Hands-On: Managing renovations remotely can be stressful, and it is essential that you have a trusted contractor in St. George.

Pros and Cons of a Turn-Key Vacation Rental

A turnkey vacation rental is move-in ready and only needs furnishings before you start hosting guests. Many investors in St. George prefer this option because it allows them to start renting out their property immediately.

These are the advantages:

• Immediate Rental Income: Since the home is already in good condition, you can start marketing it and generating revenue quickly. It is relatively immediate, especially if you can furnish and decorate quickly. 
• Less Stress: No need to manage a major renovation means this can quickly become a low stress source of passive income. You can focus on furnishing, decorating, and setting up your rental business and then hand over the reigns to property management.
• Lower Risk: With a turnkey home, you avoid many of the unknowns that come with renovations, such as hidden damages or construction delays.
• Easier Financing: You may find it easier to get financing for a turn-key property. Lenders will usually be more willing to approve a loan for a move-in-ready property compared to a fixer-upper requiring extensive work.

There are some cons, too:

• Higher Purchase Price : Move-in-ready homes typically cost more upfront, which can make it harder to find a high cash-flow property.
• Less Customization: You might have to settle for features you don’t love, and any upgrades you want to make will require additional costs that might push you over budget.
• More Competition: Since many investors prefer turnkey properties, you could face bidding wars or need to pay a premium to secure a good home.

If you ask Erika Rogers what she thinks, she would say, "If you have renovation experience, patience, and a clear vision, a fixer-upper could be a great way to maximize your profits in the long run. But if you want a faster return on investment with fewer risks, a turnkey vacation rental might be the smarter choice."

Whatever your goals in real estate, whether you're looking for a fixer upper or a brand new luxury property or anything in between, we are here to help. Contact us any time to find your investment property in St. George.