What's the best way to get started on buying a house you plan to sell?
I'm 25 in California and I am looking to invest in a house. My plan was to buy a house in need of remodeling, in a good neighborhood, and live in it while I fix it up and resale. (I have 8 years of construction experience) I have $10k saved up, a 720 credit score and was looking towards getting an FHA loan. The main thing I was wondering is how to fund the remodel, when my whole savings would be tied up in the house, when to refinance, and what type of loans to go after. I was planning to sale on a 1031 exchange but not sure if it would be ideal to do it on a first house.
- SimplytheFACTSLv 76 months agoFavorite Answer
not likely going to happen, there are rehab loans, but harder to qualify for....unless you have other collateral or enough income to support it.
start smaller. a condo in my area is selling about about 25% less than the market rate of renovated units. if it were to be bought by someone who can do the work themselves (including plumbing and electric) I estimate they can take home about 15K within 6 months when they flip it...that is physically putting in about 2-3 weeks actual work (the rest of the time is city rough inspections, final inspections, sitting on the market...paying property tax/utilities for those months.
less money is needed for the work since its only a 1 bedroom condo (no roof, heater provided by HOA, no outdoor painting)
even if you can do 3.5% down ...you need to pay closing costs....
save enough for closing costs, down payment, $5000 to start the work...make sure you can save some extra each month if materials are more than that.
at best right now you can buy for 150k (assuming you even qualify for that mortgage).
- Beverly SLv 76 months ago
Keep in mind that if you don't treat this as a principal residence you won't be approved for FHA. They don't do investment properties and you have to live in it for a year. Also the home can't be in bad shape... plumbing electrical roof etc. must pass inspection or FHA won't do it. As for financing the repairs that's something you will have to figure out..Source(s): Mortgage lender 33 years.
- Anonymous6 months ago
What do you think you are going to buy with 10k? That won't even buy kitchen cabinets. Flippers need about $50,000 on average, per house. Do you have any idea what flooring costs? It sounds like you haven't a clue. 8 years of construction experience may mean you can do a lot of the work yourself but, realize that materials are expensive, when you add it up and consider square footage.Source(s): Been renovating since 1994, and additions in the last few years too.
- JudyLv 76 months ago
10K is not nearly enough. Keep saving.
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- A HunchLv 76 months ago
There is no way you can do what you want.
If you are doing an FHA loan, the property has to be move in ready. This means even peeling paint or shabby carpet are not allowed. There would be nothing for you to "fix up".
A FHA203K loan is also unlikely to work, since you are not able to do the repairs yourself. Even if you are a licensed general contractor you have to hire another GC to do the work.
If the fixer upper is only cosmetic repairs, then it's generally sold via a conventional loan. This typically is 20% down but you might be able to find one with a 10% down.
- But you only have $10K which at least $5K will go to closing costs, leaving you $5K for the downpayment which isn't going to happen. And you also would have nothing for the repairs.
If the house is structurally unsound, you will have difficulties getting any loan on the property.
On a side note, you haven't told us your income. If you are working, under the table you are considered to have no income.
- LafawnduhLv 46 months ago
rob a drug dealer
- Anonymous6 months ago
Is $10k enough on CA prices?
The other thing is it might not qualify for FHA if it needs a ton of rehabbing.