Tips for buying a fixer upper
Noah Dylan is a new entrant in real estate. He is also a DIY person who prefers to do things on his own. One day he dropped into our office in Houston saying he wanted to buy a fixer upper. Being a retired army professional, he has a lot of time in his hands. Presently he would like to venture into the field of real estate investment. His aim was to buy a fixer upper, fix it up himself and then resell it for a profit. This is how we helped him buy his first fixer upper in Houston.
Have an idea of what is permitted in each zone
Before venturing to look at the foreclosed homes in Houston, we advised him that different areas have different zoning interests. For example, if you are looking at a fixer upper in a historic district, you may have to retain several features of the building. You will have to get in touch with the municipality to know what is permitted if the home is in a historic district.
Home inspection is a must
Dylan was able to find a fixer upper he liked, and was ready to purchase it. But before getting into a verbal agreement, we made sure that a home inspector went through the house, noted the areas that needed major renovation, checked the structure and basement of the property. Certain things cannot be fixed in a house, especially when they are in a state beyond repair. The age of the appliances will also be checked, noting the ones that are really old and might need total replacement.
Hiring an interior designer
In Dylan’s fixer upper project, he wanted to fix the home himself, which was fine, because the home he liked didn’t need any major upgrades. But in certain cases, you will have to bring an architect and interior designer as well. This will give an idea of the cost involved in a home remodeling project, and profits possibly earned post selling.
Tax incentives
Depending on the location of your fixer upper, you may or may not get a tax incentive. Check whether the area you choose to buy the fixer-upper is liable to that.
There are special loans for fixer uppers
Go through the U.S. Department of Housing and Urban Development’s Section 203(K) loan program to check for the eligibility of a loan to remodel the fixer upper that you are buying. Normally, 203(K) loan is taken as a combination loan to purchase a fixer upper in as-is condition and remodel it. As a real estate investor, Dylan had to put 15% down. For a HUD home, $5000 is the minimum mandatory amount for improvements.
Conclusion
Before buying the fixer upper, Dylan attended many foreclosure auctions in Houston, so he was able to have an idea of the market prices of homes. Now, he is busy with his new project and we wish him luck as a real estate investor. It is actually simple, just a few things to take care of and you are good to go.