Buying a Fixer Upper Home Can be Lucrative
The 2008 real estate market and credit market collapse has devastated millions of American homeowners throughout the country. A substantial percentage of homeowners has lost all of the equity in their homes they have accumulated over the years while others have their mortgage loan balances higher than the value of their homes. Bankruptcies and foreclosures soared to record numbers and home values have tanked throughout the country. Many residential homes are selling below the cost of building the home. Fast forward five years, there still is ample inventory of homes that can be bought at bargain prices. Many first time home buyers have expressed interest in buying a fixer upper home because they feel they will get much more for their money.
Buying a Fixer Upper Home: Think Budget!
Buying a fixer upper home is a great idea as long as you know your budget ahead of time. On many cases with buying a fixer upper home, the estimate the homeowner gets and the actual cost of rehabbing the home is quite different. Homeowners run into extras from contractors and cost overruns. Buying a fixer upper home can be disastrous as well. You should hire a competent home inspector and make sure you get a detailed report. Many times homeowners do not realize that buying a fixer upper home can have major electrical, plumbing, and structural issues.
Do Your Research when Buying a Fixer Upper Home
Always get at least three bids from reputable contractors. If one of the three contractors has a ridiculously low bid compared to the other two, find out why that bid is so low. Do not fall victim to a bait and switch where the contractor low balls you just to get the job and later you are stuck with paying thousands of dollars in extras. Always review the construction contract and write NO EXTRAS. Do not advance money to the contractor until work has progressed. If you get a construction loan or a FHA 203k mortgage loan, an inspector will come out and see if the work has been done correctly before the lender advances the contractor funds.
Always Pull Proper Permits when Buying a Fixer Upper Home
Make sure your contractor pulls all of the proper building permits. Structural, electrical, and plumbing work should be done by licensed professionals and needs to be thoroughly inspected before it is covered by drywall.
Before you give the contractor the final payment, make sure your home passes inspection by both your private home inspector and the city inspector and you are granted a certificate of occupancy. Make sure all paperwork including architectural drawings, permits, copies of licenses from contractors and warrantee paperwork. These paperwork will probably be requested when it comes time to refinancing your home or selling your home.
Buying a fixer upper home can be fun and challenging. If you coordinate it right, it can be very profitable for you as a homeowner.
2015 Update on Hard Money Loans: Hard Money Capital Group
Gustan Cho Associates acquired Hard Money Capital Group and can now offer fix flip rehab loans to real estate investors, real estate developers, property flippers, and consumers needing short term financing. Hard Money Capital Group offers private money loans and hard money loans in all 50 states. 35% down payment is required on all purchase hard money loan transactions and a 65% loan to value is required on all cash out refinance private money loan transactions. Hard Money Capital Group is headed by Chief Executive Officer Vince Liguori and President Michael Kaleikini. Hard Money Capital Group’s Executive Vice President Jay Boetscher, is also known as The Rehabman due to his expertise in FHA 203k Loans and his experience in hard money lending for over 30 years. Hard Money Capital Group Executive Vice President Jay Boetscher is personal friends with the President of the United States Barack Obama and First Lady Michelle Obama. President Obama always calls Jay Boetscher whenever he is in town and they always go out for a drink together.