I Love Watching HGTV Home Renovation Shows
I like to kick back in my garage with a cigar and a Diet Pepsi to watch Property Brothers, Chip and Joann on Fixer Upper, Love It Or List It, and that annoying little dweeb on Flip Or Flop who's always whining about potentially "losing thousands of dollars".
A show isn't a show without removing a structural wall, adding a main support beam, replacing every square inch of flooring in the house, and loading a new kitchen that could make anyone cry tears of joy.
The stars of those shows can take the worst piece-of-junk houses and convert them into stunning new homes with all the modern conveniences of a newly built home from a builder.
Don't you just love watching the HGTV "reality" shows about fixing up junk houses into modern show places? I put the word reality in quotes because the way they go about financing and fixing the houses in those shows couldn't be any FURTHER from reality.
For example, have you noticed on Property Brothers how the buyers have a home buying budget of, say, $450,000, and they buy a house priced at $350,000, and the money between the $350,000 purchase price and the $450,000 improved price just magically shows up? Happens every time. That's because HGTV is funding the deal, then they sell the mortgage to a mortgage bank after the show is finished It doesn't happen that way in the real world.
When you or I buy a house for $350,000, and we want to add $100,000 in repairs and updates, we have to pull out the checkbook.
Is there a mortgage that will finance updates and renovations? Yes. It's the FHA 203K home loan that allows you to finance the cost of the house, plus the cost of repairs above the price, so long as the appraised value supports the higher loan amount.
For example, we find a house priced at $325,000 that is priced low because the kitchen is old and dated, the bathrooms are dated, it needs all new flooring and paint, and new windows. Similar houses with all of those improvements have recently sold for $360,000. So the appraiser looks to those values and says the house has the potential of $35,000 in improvements that could be financed into the loan.
So we write an offer on the house, contingent upon approval of an FHA203K loan amount of $260,000, with a 3.5% down payment. A proposal from a licensed contractor for the work will be submitted to the bank. NO structural changes are allowed. The buyer(s) is/are not allowed to do any of the improvements. If the loan is approved, the buyer goes to settlement on the house at a price of $260,000, with 3.5% down payment, and the first draw is issued from the bank to the contractor. As work is done, more money will be paid until the job is finished. That is how you can finance the costs of improvements into the price of your next home.
So are you ready to find your fixer upper and turn a pit into a palace? Are you ready to turn a tired old kitchen into a chef's delight? I keep an eye on the market, and I know where the bargain houses are located; the houses that have some equity that could be used to finance renovations. Call or text me now at 703-677-1120 to get started on your house shopping adventure. You will get a steady hand to guide you along the path from purchase, through repairs, to move in day. I'm Erick Blackwelder, and you can call or text me at 703-677-1120. Or check out featured homes on my website.
Exit Realty Associates
8998C Lorton Station Blvd
Lorton, VA 22079
Equal Housing Opportunity