Floridagal
Well-Known Member
- Joined
- Aug 8, 2014
- Messages
- 63
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- 15
Neal is correct as is Floridagal. There is a huge difference between a rehab and completing a partial done home. You guys wont have the demo work and wont be dealing with a million unknowns as you can for the most part assume all that has been done has been done correctly and to code. We could have moved into our home at any time after closing as it was technically sold as an established dwelling but we chose to take about 6 months to get the major dirty work done. Even though we had a working bath and a bed there like you mentioned oh and a microwave and mini fridge.
We paid cash at the sale and cash as we went along for supplies so there was never a note against the property and that allowed us to run pretty much in stealth mode.
You wont have that option. Around here it is very difficult if not impossible for a person to secure any kind of line of credit solely against a project such as yours based around the home owner doing the work unless he is a contractor with a track record. In my parents day my dad went to the bank and said I bought a lot and Im going to build my own house I have a job and I want a loan to build the house and they said ok. More recently I have helped one person build a house and have a good friend that built his own home and both were on their own as far as money and in both cases the same banks later said oh nice house would you like a home equity loan against the home we thought you couldnt build. You may have to leverage your current home or something to secure a loan.
I dont know how it is in Fla and I know a lot of financial houses are holding paper on a lot of unfinished projects so maybe they are ready to think outside the box. I always try and look at it from all perspectives and I did this with the short sale we bought. I say to myself this house has been on the market for 2 years and they are almost giving it away. How come some builder/flipper/rental landlord hasnt scooped this up. In our case it was the little town was exactly where we wanted to live and a place where hardly anyone else wanted to live. So for a builder or flipper putting a lot of time and money into it he would still have been competing in a depressed market. For a landlord they are looking for turns on their money and not major renovations. In this town it would have rented but there were more for sale that just needed fresh paint.
The only real thing an individual has going for them is sweat equity and location. You have to view it as you are in competition with everyone else that has looked at it. They have all carefully calculated what the final cost will be for them and how they have to finish the house and then they factored in after it was done what they could likely expect to get as a return and how long that might take. You have an advantage you know you have a homeowner ready to move in and it is what you want. You also dont need to turn a profit you just want to come in under the market value.
Thank you Bud for your input, all helps a lot reading all you and others have gone through while building or rehabbing. The home wasn't on the market and never has been, we happened to come across the home so I asked the real estate agents about the home, and no one could give me any information on this partially finished home. So I did a little research and found the homeowner, and contacted him to find out if he would be interested in selling, and he was due to circumstances in his life going on. We made an offer and he excepted after I got an appraiser to do an appraisal on the home as is, and estimated value upon completion, and the numbers we're perfect for us. So we are paying cash, and all the building materials, sub contractors, etc we will be paying out of pocket. Once it's complete we may decide to take out a small mortgage on it but it's not a big hurry.
I have a complete history of all permits, inspections, and results of inspections, everything has passed and there are no problems with any of the work that's already been completed. The seller had started the home to be a hurricane proof home, he went above and beyond what was actually required by the building department.
All the banks that I spoke to before we signed the contract and purchased stated that based on my husband being a licensed elevator contractor that they would give a construction loan for Owner/builder but since the home is what they consider 85% complete they couldn't give a construction loan. Which we were alright with since we could purchase the home and complete the home with out of pocket cash.
We would want to get a small mortgage after it's complete and after we sell our primary home in a couple years so that we can have some interest as a tax ded we will also apply for homestead exemption after we sell our primary home is a couple years. Although, not sure we might be better off not taking out a mortgage once it's complete because the tax ded probably would be less then the benefits of not having a mortgage, we'll cross that bridge when we get to it lol
Thank you so much for all the input, it really helps a lot to read what you guys have to say.