What to pay attention to when buying a cheap home high repairman

Is Buying a DIY Home a Good Idea?

As the housing inventory shortfall continues, borrowers need to get creative in their search, especially at the first-time home level.

Chances are you’ve watched several do-it-yourself or fix-it-and-flip shows that have become ubiquitous on TV. At some point, you probably even thought, “I should do that too!”

Choosing the repairer-upper route gives you the opportunity to design and create a home to your liking. But before you take the plunge, there’s a list of red flags to watch out for in order to avoid buying a pitfall, as well as issues that may not be as bad as they seem.

Four Decisive Factors When Buying a Repairer

Either by choice due to skyrocketing home prices, or out of necessity due to the lack of available listings, many home buyers are turning to repairers.

However, if you buy the wrong repairman because you haven’t seen the red flags, you could end up spending as much or more than a move-in ready home. Being able to spot these hidden costs could save you a ton of time, money, and frustration down the road.

To avoid getting burned, we have obtained expert information on the most important “attention” factors for this type of property.

1. Structural damage

Scott LangmackCOO at Kukun

“The big problem is any structural problem, which often occurs through dry rot. Dry rot usually occurs when there are some sort of small, usually not visible cracks in the siding of the house or somewhere around a bathroom where moisture is getting in.

“That’s the biggest problem you can have, because you might get to a point where you basically have to rebuild the house.”

–Scott Langmack, Chief Operating Officer at Kukun

Wood expands and then contracts over time as it dries, weakening the structural integrity. Dry rot is like cancer in a house. This is the biggest problem you can have because you might get to a point where you basically have to rebuild the house.

2. Basic issues

Kasey Deckerreal estate agent at 1Look Real Estate

“You have to be able to see if the foundation is good. If it’s bad, it doesn’t matter how much you put into it, because it will always be a money pit. Check for termites. I always suggest an inspection and will usually bring our contractor for my buyers, to have someone who can advise how much work it will take to fix something.

You need to make sure you are aware of how much money you will need to bring the house to where you want to live. Then you can do other projects, like flooring, painting, and remodeling kitchens.

3. Old plumbing

Scott LangmackCOO at Kukun

“Older homes very often use galvanized steel pipes, which corrode over time and all need to be replaced at some point. Replacing the plumbing is very expensive because you have to reassemble the walls of each bathroom and shower. Sometimes showers don’t have easy access points, which means removing wall panels or peeling tiles. It is a major project.

To determine if you have a plumbing problem, the main source of water pressure will be through flow. Check the shower and tubs as these are the pipes that require the most volume. If the flow is not good, then you have pipes that are starting to age. You should also look for water stains on the ceiling as galvanized pipes often crack and leak.

4. Outdated Electricity

Scott LangmackCOO at Kukun

“Electrical problems usually affect homes that are 40 years or older. And there are two dimensions to the problem: do they have the right amperage — the amount of electricity designed to go into the house — and do they have aluminum wire. Aluminum wire is terrible and never lasts.

Look at all electrical connection points to see which era they belong to. If there are old light switches, you should call an electrician before doing anything with this house.

No problem buying a cheap repairer

On the other hand, some homes may have smaller, easier to fix issues that will drive away less savvy potential buyers. These issues might not be as big as they seem and could be solved with cosmetic repair, small budgets and/or short lead times.

Knowing whether an inspection issue or outdated feature is tradable or not could be the difference between finding a good deal or continuing to search in a tight housing market.

“Get the house at the right price, include the renovations in your loan, and you’ll go from ‘worst to first’ on the very item that scares everyone.”

–Jeff Philbin, Branch Manager at PrimeLending

Jeff PhilibinBranch Manager at PrimeLending

“Kitchen pans, rotting decks, damp basements, leaky roofs… We see it all the time where people walk away from a terrible kitchen to bring in a remodeler and open up the whole floor plan, install a new one and have the great open concept everyone was looking for – with a kitchen they could choose for themselves.

As long as the price reflects the work required, you can go ahead and complete the repair right after closing. Get the house at the right price, include the renovations in your loan and you’ll go from “worst to first” on the item that scares everyone. They see a mess, you see a new roof, a new furnace or a shiny bathroom.

Kasey Deckerreal estate agent at 1Look Real Estate

“Nine times out of 10, water damage to the ceiling will be fixed with a new roof. I just replaced the roof on my house for $6,000, which is a lot of money but far less than big problems. Then , you can paint the ceiling to fix the watermarks.

Floors are another. Often there is hardwood under those bad carpets and linoleum. It can also feel like a big deal when you’re walking and you feel the ground give way. But you can usually repair weak spots by going down to the basement crawl space and replacing the damaged truss.

Scott LangmackCOO at Kukun

“Rodent infestation is common in untended homes. But it’s really easy to fix professionally in a few weeks. An exterminator will remove all dead carcasses and seal all holes.

Another is surface mold. It looks terrible, but you can take that drywall off, you can peel that carpet off. It’s just a matter of cleaning up the junk and still having a solid house to work with. The mold you don’t want to deal with is black mold because there is no easy cure. It stayed in the walls for a long time and seeped deep into the wood.

The best home loans to repair

The advantage of buying a fixative at the right price is that it offers a clean slate and allows you to replicate your favorite part designs.

Financing these homes has also become easier in recent years. It used to be that you needed a mortgage to buy a repairman and then another to renovate it. Fortunately for today’s borrowers, lenders have since developed all-in-one options for financing a repairer.

Here are some examples of home loans to repair:

As with any other type of loan, choosing between these options depends on your credit score, the amount of your down payment and your budget.

Jeff PhilibinBranch Manager at PrimeLending

“The family of loans called “Renovation Loans” is ideal for repairers. Loans like the Fannie Mae Homestyle, Freddie Mac Choice, and FHA 203(k) are all geared toward properties that wouldn’t normally pass a standard appraisal. They allow you to buy and renovate almost any home, which opens a lot of doors (literally)!

Tips for buying a home to renovate

When deciding on a repairer, it’s important to think about two things: what the property currently is and what it could be. In such a hot housing market with limited choices, extremely short time to market and multiple offers above the asking price, buying a property to renovate may actually be a prudent option.

“It’s a market like I’ve never seen in 35 years. These properties with potential could be exactly what you are looking for if you have the vision and the financing to put everything in place.

-Jeff Philibin, Branch Manager at PrimeLending

Of course, you need to be realistic with your budget, your timeline, and the level of DIY you’re comfortable with.

Kasey Deckerreal estate agent at 1Look Real Estate

“A lot of people go into it thinking, ‘I could fix this, I see these shows on HGTV, it can’t be that hard.’ But you can’t just remodel the kitchen, there are a lot of steps and it takes a lot of time, especially in this market with ever-busy contractors and supply chain issues.

Be sure to trust your real estate agent and your lender to advise you. They can guide you and help you stick to your budget. Finally, it’s worth doing the renovations right the first time, because it’s always more expensive to fix after you’ve done it wrong.

Jeff PhilibinBranch Manager at PrimeLending

“It’s a market like I’ve never seen in 35 years. These properties with potential could be exactly what you are looking for if you have the vision and the financing to put everything in place. Instead of getting into a bidding war and paying a premium for a home that may not yet be your ideal, consider looking below your budget and leaving room for renovations. Allowing a cushion of $50,000 to $100,000 allows you to examine many previously unseen options.

The bottom line for homebuyers

Buying a repairer might be the best way to navigate the 2022 housing market and avoid some of the fierce competition. If this sounds like the right path to homeownership, start today.

Contact local lenders and real estate agents to find those who can help you through the process, renovation costs, and the types of mortgages you qualify for.

The information contained on The Mortgage Reports website is provided for informational purposes only and does not constitute advertising for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent company or affiliates.

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