The hard truths about buying a fixer-upper

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Buying a fixer-upper is one of the most romanticised ideas in Australian real estate.

Who hasn’t dreamed of turning a worn-out cottage into a bespoke family home or a high-yield investment property?

The promise of sweat equity, creative freedom and a lower price tag is compelling, but the reality often includes budget blowouts, sleepless nights and navigating council red tape. 

This article is your straight-talking guide to what it really takes to renovate a fixer-upper, and whether it’s the right move for you. 

What is a fixer-upper, really? 

A fixer-upper is a property that needs substantial repairs or renovations before it’s liveable, rentable, or up to market standards. These homes are often cheaper upfront but come with strings attached: structural surprises, outdated systems and strict council compliance. 

“We often remind buyers that what you save on the sticker price, you might spend, and then some, behind the walls. Just because it seems like a steal upfront, doesn’t mean the bank will agree.” says an Aussie Broker 

Fixer-upper vs. move-in ready: The trade-off 

Pros of buying a fixer-upper: 

• Lower entry price, particularly in high-demand suburbs. 

• Opportunity to add value and create instant equity. 

• Greater creative control over finishes, layout and design. 

• Potential stamp duty savings (based on original purchase price, not future value). 

Cons to consider: 

• Risk of hidden defects: termites, asbestos, foundation issues. 

• Financing challenges: lenders may be cautious with run-down homes. 

• Higher holding costs if you’re paying rent and a mortgage during renovations. 

• Overcapitalisation risks spending more than the area can support. 

Questions to ask before you start house-hunting 

Buying a fixer-upper isn’t just a home purchase, it’s a construction project. Ask yourself: 

• Do I really understand what needs doing? 
  Painting and floors are one thing. Re-stumping, rewiring or replacing a roof is another world entirely. 

• Can I fund a 15–20% contingency? 
  Renovation veterans know surprises are part of the job. Your budget needs breathing room. 

• Do I have time and patience? 
  Even with a builder, you’ll be making endless decisions. Expect delays. 

• Will I need to rent elsewhere during the works? 
  Dual housing costs can derail your finances quickly. 

• Are there planning or zoning restrictions? 
  Bushfire zones, flood risks or heritage listings can limit what you’re allowed to change and increase costs. 

• What if interest rates rise mid-reno? 
  Renovations don’t wait. Neither do loan repayments. 

Need help working out your budget or borrowing limits? Try our Borrowing Power Calculator. 

Inspections that save you from disaster 

Don’t rely on a standard building and pest report alone. For serious renos, invest in these specialist checks: 

“It’s not scare tactics, it’s due diligence. A $700 report can save you a six-figure mistake,” says an Aussie Broker 

Why budgets blow out 

Even well-planned projects can go sideways. Here’s what usually tips the budget: 

• Structural surprises: rotten beams, hidden water damage, termite infestation. 

• Scope creep: one update reveals five more. 

• Compliance upgrades: smoke alarms, fire egress windows, insulation. 

• Supply price hikes: timber, tiles and steel can fluctuate fast. 

• Tradie delays: busy schedules can stall your project. 

• Temporary housing: if the site isn’t livable, you’ll need a Plan B. 

• Interest accumulation: staged loan draws start building interest immediately. 

Rule of thumb: Add 15% contingency for cosmetic renos, 20–25% for structural. 

Financing a fixer-upper 

Traditional home loans may not cover the full scope of renovations, especially if the property is in poor shape. But you’ve got options: 

• Construction loans: Funds released in stages as work is completed. You only pay interest on what's drawn. 

• Equity redraw: If you already own a home, you may be able to fund renovations using your existing equity.  

• Line of credit: Flexible and accessible but can lead to overspending. 

• Reno add-back valuation: Some lenders assess your loan based on the property’s post-renovation value, provided you supply detailed quotes and plans. 

Aussie Brokers can help you explore which loan options suit your goals, and what paperwork you’ll need. 

Living through the reno 

Trying to live on-site? You’ll need patience, and a backup plan. 

• Prioritise bathrooms and kitchens so you have working amenities throughout. 

• Portable cooking setups are cheaper than takeaway five nights a week. 

• If you’ve got kids or pets, set clear safety zones and daily tidy-ups. 

• Accept the mess like building is noisy, dusty, and disruptive. 

Sometimes, short-term accommodation is the better move. Our brokers can help you assess affordability with our Refinancing Calculator.  

When it’s better to walk away 

Not every “diamond in the rough” is worth polishing. 

Red flags: 

• Major structural failure 

• Extensive fire or flood damage 

• Illegal or unapproved additions 

• Heritage restrictions that block essential improvements 

• Asbestos throughout that would require full gutting 

“If fixing one issue wipes out your entire reno budget, it’s time to walk. Fixing a structural issue to make the property livable may not translate to an uptick in value, and could result in a sunk cost to you that could set you back 5 figures before you even start on the cosmetics and floorplan” says an Aussie Broker. 

Smart renovator tips 

Here’s how experienced buyers keep things on track: 

• Get three quotes for every trade as prices can vary dramatically. 

• Use fixed-price contracts wherever possible. 

• Order early especially windows, tiles, and appliances with long lead times. 

• Track every dollar using a basic spreadsheet can help you stay in control. 

• DIY wisely, painting is fine. Electrical and plumbing? Leave it to the pros. 

• Reuse what you can such as original floorboards, doors, and fixtures can be features, not flaws. 

You might also be interested in: Costs of building a home

Is a fixer-upper worth it? 

It can be. But only if you go in with open eyes and a solid plan. 

Start by checking your borrowing power, understanding your equity, and running the numbers on holding and reno costs. Aussie’s Borrowing Power Calculator and Credit Score Check. 

Or talk to an Aussie Broker to get personalised support on buying smart and funding your fixer-upper without overreaching. 

Ready to renovate? 

An Aussie Broker can help you weigh the costs, assess your loan options and create a renovation game plan that stacks up, before you lift a single hammer. 

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