The advantages of renovating include that you can often accomplish your housing goals faster than with building because the outside structure of the house is already in place. Another advantage is that you can generally see the house you are getting. It may be cheaper to buy and renovate than to build, particularly if you can do much of the work yourself (i.e., sweat equity). Renovating may be preferable if there are no available lots in a desired area, but there are existing homes for sale.

The disadvantages of renovating include that it may be more expensive to renovate than to build. Renovations often go over budget and have delays because of the uncertainty as to what will actually be required to renovate. The rule of thumb for renovating, and sometimes building, is that you should double your budget and then double the resulting amount again. Moreover, you should be aware that you may have unanticipated additional expenses for a yard and fencing, depending on what was renovated. Also, the same construction-loan interest costs and rental expenses may be applicable, depending on how extensive the renovation is. During the renovation process, you may encounter other costly problems that were not noted before. Most importantly, just like in building, there are high monitoring costs, in terms of time and money; high stress tolls, as you make the myriad decisions on the house; and high risk that the project may become more expensive than planned.

You need to understand the advantages and disadvantages of renting, buying, building, and renovating so you can make an informed home decision.