Fixer Uppers: Propertunities Are Endless
Fixer uppers come in all sizes. As a building and remodeling contractor since 1988, I’ve seen lots of propertunities. Most of them are in disrepair as a matter of deferred maintenance where the owners don’t have the means or the motivation to maintain their property. In some cases, as in vacant properties, they are vandalized. Some fixer uppers are damaged from fire or water. Foreclosures are a good source of fixers. The real question is “How do I find one?” Since our local Realtor’s MLS doesn’t allow agents to display whether a property is a foreclosure or not, you have to line yourself up with a licensed agent who can search the back end of the MLS for those types of fixers. I have helped many of my clients find good value in foreclosures.
Occupy or Flip For Profit?
Purchasing a fixer upper is not hard but there are pitfalls to be aware of. A cash buyer has an advantage where the property need not pass a lender’s approval or need to be insured. It is a risk an investor will need to take in the hopes of a fine profit down the road. For those who wish to occupy and can pay cash, they need not worry about the insurance factor but will want to make any repairs required by an insurer to get insured.
Rehab Loans Save The Day
Financing any property today isn’t easy and for fixer uppers, it’s a little tougher. Not only does the buyer have to be approved by the lender but so does the property. Thankfully there are rehab loans available. For those who wish to purchase and occupy, the Federal Housing Administration offers a program called the FHA 203K. It comes in two flavors: 203K Streamline and Full 203K. The Streamline program is the most widely used. It is limited to $35,000 in repairs and updates as long as there aren’t any structural repairs or alterations involved. The Full 203K is limited by FHA guidelines according to maximum allowable loans per county. The best part of the FHA 203K is the minimum deposit is only 3.5% of the purchase price plus the cost of improvements. Example: Purchase price of fixer upper is $100,000 and improvements are $10,000. Deposit is 3.5% of $110,000 which is $3,850. $10,000 worth of improvements is only an extra $350 out of pocket.
Rehab Loans For Investors
While the FHA 203k Program is intended for owner occupants, there is only one company that I know of in New Hampshire that will fund a fixer upper project. Contact my “go to” lender, Amy Morrill of Regency Mortgage and please let her know I referred you. Their Rehab Loan Program follows FHA 203K guidelines but is intended for investors. The minimum deposit on this program is 5% of the purchase price plus the cost of improvements. How to find fixer uppers? Take a look at my article on => How To Buy Foreclosed Homes