Homes in need of repair or updating can be had on the cheap, and the fixes may not be very expensive at all.
For instance, a house potentially worth $250,000 may sell for just $200,000 when it needs only $20,000 in repairs. That leaves $30,000 in potential equity for a buyer with the initiative to manage the fixes.
According to real estate data website Realtytrac, the median home price in a “distressed” sale was 42 percent lower than the price netted in non-distressed situations. That’s a big discount.
The Federal Housing Administration’s (FHA) 203k loan allows buyers to finance the home and up to $35,000 in repairs with one loan.
It’s possible to have lower monthly payments and higher equity in your home the moment you move in, compared to your friends and neighbors.
Downsides of the 203k loan program
- Gain instant equity
- Deal with less competition to buy the home
- Gain valuable experience remodeling a home
Don’t be surprised if the lender requires you to send a bid back to the contractor two or three times for missing information.
You will also have to decide on the upgrades that are within your budget. That can be exciting, but also stressful. You’ll have to make decisions quickly to ensure the loan approval stays on track. Read More