fixerupper – Gladys Cervantes Realtor

1) Save $100’s of Thousands on Purchase Price (see below examples source data: themls)

3 Bed 1 Bath, 1650 sqft to 4 Bed 2 Bath 1650 sqft

2 Bed 1 Bath, 1084 sqft to 2 Bed 2 Bath 1304 sqft

1 Bed 1 Bath, 1020 sqft to 3 Bed 2 Bath 1600 sqft

2) Increase Equity (value) Faster. The above renovations took place over a 6 to 12 month period and averaged an 32.67% Increase in value. Compare this to the “Historical Average Stock Market Return” is 10% according to S&P 500 as reported by NerdWallet

3) Get a Home in a Neighborhood/City that may otherwise be out of reach.

4) Use increased equity for further updates with specialized financing;

Renovation loans are mortgages that let you finance a house and improvements at the same time. With a renovation loan, you can pay off improvements over a longer period of time and at a lower interest rate than other types of financing. Options include:

FHA 203(k): Offered through the Federal Housing Administration, FHA 203(k) loans allow lower income and credit scores than conventional mortgages. They can be used for most improvement projects.

VA renovation loan: The Department of Veterans Affairs recently updated its VA loan guidelines to include the purchase and renovation of a home. A VA-approved contractor is required, eligible projects are somewhat limited and your lender may charge a construction fee.

HomeStyle: Guaranteed by Fannie Mae, HomeStyle mortgages require higher credit scores than FHA 203(k) loans. But almost any improvements are eligible, including “luxuries” like a pool or landscaping.

CHOICERenovation loan: Guaranteed by Freddie Mac, this mortgage allows improvements that help homes withstand natural disasters, among other upgrades. And borrowers can make repairs themselves, prior to closing, to earn a down payment credit.

A fixer-upper mortgage may also help cover your mortgage payments if you have to live elsewhere while improvements are in progress, and may include extra funds in case projects exceed the estimated cost.

5) You get a home EXACTLY as you want style, finishes, features. Be it Modern, Traditional, Classic or Transitional. You get to choose.

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With a little editing, this could have GREAT curb appeal. remove old hedges, awnings shutters, and update with a modern color scheme.

If you’re in the market for a new home and searching the listings diligently, you’ve probably noticed the description “move-in ready.” This is the listing agent’s way of saying the house doesn’t need any work. Just bring your stuff in, and you’re all set.

But how many home-buyers purchase a new place and keep everything the same? Even if every wall has a fresh coat of paint, there’s new carpeting on every floor and all the bathrooms have been updated, what are the chances that the new owner won’t change some detail? Just because things are updated doesn’t mean every single aspect of the home is going to be to the buyer’s tastes.

That’s part of the reason it might be a smart real estate move to consider buying a “fixer-upper” — a house that’s decidedly not move-in ready, one that needs some work. It can be similar to building a brand-new house to your own specifications: You get to be the one to choose wall colors, carpeting and tile styles, window coverings, etc. — not the previous owner.

And this is not something to be underestimated. A person might buy a new house with color schemes that they can live with, but maybe don’t love. But because the decor is newer, they are reluctant to replace it. Because it’s not necessary, they settle for living with something they don’t love.

This could be great, but you anything, there are amazing hardwoods under those original carpets. Remove that dated wallpaper and paint.

On top of that, the buyer might be paying a premium for something they don’t love. If a seller has redecorated or improved the whole place, that seller is reaping the benefit. If the home’s value has been raised, the buyer is paying for it. Also, consider this reality: A seller who re-does a whole house in order to sell is not likely putting in the highest-quality materials. They’re cutting costs to maximize profit.

But if you buy a fixer-upper, you might be able to secure an undervalued property, improve it and get the benefit of the extra equity. It’s a core real estate concept. If you can find the right property, this could mean thousands of dollars almost immediately. And because you’re the one choosing what materials are used, you could be getting this instant equity and your dream home all in one package.

Strange color scheme and layout, but even this could be updated to todays standards..

This concept is especially true if you are willing and able to do some or all of the work yourself. The term “sweat equity” is exactly what it sounds like: You can improve the value of a home, increasing your equity by working on it yourself. And the more you can do yourself, the greater the value of your sweat equity.

Painting is probably the minimum you should be able to tackle on your own. If you can’t or aren’t willing to roll some paint on some walls, then maybe a fixer-upper isn’t for you. But if you can also lay tile, change light fixtures, fix toilets, tear down wallpaper — maybe even install drywall or carpeting — by yourself or with friends to avoid hiring help, you can save substantial amounts of labor costs. When you buy a fixer-upper, every hour of your own labor can be like putting money in your own pocket.

So remember: When you’re browsing those home listings, “move-in ready” may sound good, but you might not want to ignore those fixer-upper listings. The combination of control and cost savings — especially if you can address your preferred updates yourself — could be extremely valuable.

Credit: Abhi Golhar, Forbes Real Estate Council

Tag: fixerupper

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