Flipping a home is one thing. You buy the home, you fix it up, you sell it. But, what if you want to buy a home to fix it up for yourself? When you rehabilitate a home for your own personal usage, there are a few things that you need to keep in mind. We put together a small list of advantages to personal home rehabilitation, and also some things to keep in mind.
1.) There is no time pressure
When you are flipping a home, you may be pressured by a time frame. When you have the intent to resell the home you are fixing up, you will slowly lose money everyday that you are still flipping. When you are rehabilitating a home for personal use, the only extra expenses that you will be paying will be your own personal expenses. Time is money, and if you want to fix up a home for personal use, it would be the best use of both your time and your money.
2.) You can make it your own
When you are flipping a home, you have to keep the end-user in mind. When rehabilitating the home for yourself, you are the only one you have to think about. If your home is going to be your residence, you could add your own personal touch to the place instead of staying neutral to please everyone else. You could paint the walls bright pink and the ceiling dark blue if you wanted to. You need to keep resale in mind though, if you ever plan on selling the house in the future.
3.) What to do first?
If you have absolutely no idea where to start, look at these features first.
The roof - Look at the shingles and any possible damage to woodwork. Check out the ceilings for any water damage, or termite damage.
The electrical systems - Is it a fuse box or breakers? When was the last time it was updated?
The plumbing systems - Look under all the sinks in the home, and check floor tiles for water damage. Also, look outside of the home for any tree roots that might impact the plumbing system of your home.
- The structure of the home itself - Look for cracks in the foundation, this can be VERY expensive to fix.
4.) Personal rehab may lead you to priority when it comes to offers
If a private seller knows you are going to buy the home and fix it up to personally live in it, they know you have more drive than the rest of the buyers. This may lead to priority over other buyers, because the seller knows you will take care of the home.
If it is a foreclosure property, there is a time period (usually 2 weeks) when it is first listed, where you will not be competing with those who are interested in flipping it. This priority time period is an excellent opportunity for those wishing to rehabilitate a property for use as a primary residence.
5.) Look at FHA loans, and the offers that are included
Many people give up their dreams of rehabilitating a home because they don’t have the money at hand to make the repairs. FHA loans may have clauses that will work in your favor. The FHA also has a specific loan dedicated to rehabilitating homes. This loan program, the 203(k) loan, will put money away in an escrow account for all of the rehab work done to the home. When all of the repairs are done, the money is then distributed to pay for the construction. For more information on FHA loans and restrictions about FHA loans, visit our blog post about loan restrictions and requirements.
These are just a few things that you should keep in mind when rehabilitating a home for your own personal usage. For more information about home rehab for personal use contact one of our professionals. For more information about financing a home for this purpose, visit www.fanniemae.com.