Not if you do your homework. - Posted by Rolfe K Mpls/StP
Posted by Rolfe K Mpls/StP on March 18, 2000 at 15:30:03:
Having done similar renovations, I am familiar with fired up fixers.
First, about the renovation itself. Time is a critcal element here - you’ll want to complete the renovation promptly. Extra time takes extra money and energy. Ask yourself if you are really confident about such a process. Do you have the guns (capacity) you think you need? Certainly, these projects are doable. But a fire renovation is not for everybody, especially if you have a seperate full time job. Listen to your head, your heart, and your gut. Perhaps seek some advice from a local builder. Then, if you believe you can do it, you probably can.
Second, financing. You’ll uncover several options at this site. Here’s a traditional one. Construction lenders, accustomed to lending $ to new home builders, sometimes will lend $ for rehabs. Ask around, and see if you can locate such a lender. The construction lender will want a sale (you may be able to pre-sell)or a permenant mortgage (you may opt to keep the property as a rental) at the end of the project. You’ll have to write up a scope of work, have an “as will be” appraisal done, and satisfy a host of other lender requirements.
Finally, consider holding the home as a rental. I have sold renovations, and held renovations for rentals. With the L/V you mention, a refinance mortgage at the end of the project would probably cover most if not all of your costs. Sure, you might make $20k at the end of the project. You’ll have an opportunity to make a lot more than that if you hold on to the property.
Good Luck; Rolfe