Buying A Fixer-Upper

You’re a handy person, you know your way around power tools, and the employees at Home Depot all know you by first name.  You’d give Ron Swanson a run for his money.  But, does all this mean you can buy that fixer upper?

So many people start their real estate journey with a very skewed idea of what the realities are when it comes to purchasing real estate.  TV shows and stations like HGTV have given most buyers an unrealistic approach to buying a home, especially when it comes to fixer uppers. 

So for starters, not all loans will allow you to purchase homes if they don’t meet the conditions requirements.  And so if you aren’t paying in cash, this is generally the first road block to a buyer's journey with Fixer Uppers.

You see, lenders are willing to lend people large sums of money on homes, however, these lenders also want to hedge their investments, knowing that god-forbid you even miss your first mortgage payment, if they have to foreclose, they have a saleable asset.  Make sense.

So, what type of loans do allow for doing repairs?

1. Investment or Conventional loans with higher than 20% down.  All depending on what work is required.  This requires a lot of cash up front, and then the cash to do all the repairs after purchase.

2. Rehab or Homestyle Loan.  These loans allow you to purchase properties with as low as 0% down that need repairs and also will loan you the additional funds needed to make said repairs.  The downside to this is that for all the required repairs for the loan, the lender will require an approved licensed contractor to complete the work.  The upside is that you don’t have to be handy to use one of these programs.

And right now, with a market with the lowest inventory numbers in decades, a fixer upper might be a great option.  Something that has sat on the market, but has good bones, just waiting for someone to come through and give it that make-over.  And the best part, no multiple offers...