These homes are also often called ‘handyman specials’ and they are houses that have physical problems that can range from those easy to see – such as broken windows or peeling paint – to issues that will only be caught when you look more closely – such as electrical systems that are outdated.
Most of the time, buyers will want to go the safe route and buy homes that are ready to be moved in to. However, if you have the time as well as the financial resources that allow for you to tackle sizable projects, a fixer-upper can be an amazing option that has the potential of reaping magnificent rewards.
Once you have located the ideal fixer-upper for you and your family, you will more than likely need to take out a rehab home loan to get it. The 203k loan is more than just your traditional mortgage loan. This loan also includes funds that are added on specifically for the purpose of renovations or home repairs. Because this is an FHA-backed loan, it will require a bit more paperwork as well as upfront documentation. Once you are approved for the loan, you will be on your way to turning that fixer upper into the home of your dreams.
Here are some of the benefits to getting a loan of this type:
- You will get the money needed to buy and upgrade your property all in a single loan.
- The amount of the loan is based on the value of the home including any renovations.
- You will begin building the equity in your house almost immediately.
- Renovation of your home takes place with little to no extra out of pocket expenses.
- Your down payment might go as low as only 3.5%.
- This type of loan can be used to purchase property that would otherwise not be eligible for financing.
- When you buy fixer uppers, you face less competition from other people wanting to purchase the property.
- You will be able to take advantage of good deals when it comes to home purchases.
- You will have a larger selection of properties to choose from if you can buy them in any condition. This includes properties that do not currently meet the standards set forth by the FHA.
- This type of loan could be advantageous to the seller as well because they will not need to repair or fix up their property before selling it.
Surveys aka Inspections
When you buy a fixer upper, or any home really, it is important that you have it fully inspected, or surveyed. The inspector or surveyor will be able to let you know if there are any serious defects or even the potential for serious defects with the property. This can include pictures of the issues as well as advice on how to handle these issues. It is important to take care of these issues as soon as they are found before they become worse. If you wanted a specific electrical inspection, you could get in touch with someone like Poss Electric (https://posselectric.com/fixtures-lights-fans-chandeliers-recessed-lighting/), who will be able to do a detailed inspection of your home’s electrics. Following the inspection, you will be able to find out what are the repairs (like plumbing, cooling, and heating, roofing, etc)that you need to undertake for your fixer-upper. For example, contacting a professional service for the same like Nance Services (you could visit their service page here) could help you solve your HVAC and plumbing problems.
Once you have the property, the loan, and have had the inspection done, you will know what needs to be done and now you will need to find someone to do the labor. In other words, you need to have a plan. Some people might be able to tackle this part themselves, but most of us need to hire professional contractors to get this done. If you will be hiring a contractor, get referrals and call in more than one to get a quote for the work as well as for how long it will take. Don’t be afraid to check with their referrals too. If one professional bids extremely lower than the others, be wary. Why are they bidding low? Do they lack confidence in themselves or their work? Will there be corners cut when it comes to materials? Do not be afraid to ask these questions.
As you can see, if you can deal with waiting to move into your property until after the repairs have been completed, it can be quite worth your while to start out with a fixer upper and turn it into your dream home.