203k Loans can help you with Picking the Right Project
203k Loans can help you with Picking the Right Project
Simple to Stunning: Picking the Right Project
We have been showcasing various before and after projects in this Simple to Stunning section of our blog for months. And now that we are offering renovation loans we thought maybe including some tips from the experts at Houselogic, they have suggested knowing four things about a fixer upper before taking on the project.Throughout the article, they highlight the need to treat a fixer upper like a business—making sure it makes sense financially. First, the price of the home must be evaluated. “If it is a fixer-upper then it should come at a fixer-upper price” states the article. So, falling in love with a house before you have done your homework on the price could lead you to disappointment or a bad financial decision. Not only do you need to know how much money you can put into the project, you need to know how much you should put into the project. A Realtor can help you figure out what the houses around that area are selling for to know if you are getting a good price on the fixer upper so when you turn around and sell it, you haven’t out priced yourself for the neighborhood.
Secondly, evaluate what projects must be done and what the cost will be. A lot of homes that “need a little TLC” are in need of new paint, landscaping or just overall curb appeal—these are projects that can be handled with little expense and a little sweat equity. These projects will instantly improve the home and its appeal. But there are some projects that require professionals which brings us to the third item; which “pro-projects” add instant equity? Thanks to Houselogic and the data provided by the National Association of Realtors’ Remodeling Impact Report, we know!
“If these three projects are on your fixer-upper’s list of must-haves, then you may have found your dream equity-builder:
- New roof: A new roof may not be the remodeling project of your dreams — until you realize it could actually pay you. You’ll spend about $7,500 to install it (based on a national average determined by contractors responding to the RIR survey), but when you sell, it could recoup 109% of that or $8,150, according to REALTORS® surveyed.
- Hardwood floors: It costs about $3,000 on average nationally to refinish hardwood floors. The survey indicates you could recoup 100% of that at resale. If you’re looking at a fixer-upper (at the right price) that needs the floors redone, that’s like getting the floors for free! New hardwood floors are also a good choice at a cost of about $5,500 to install, and could recoup $5,000 of that at resale.
- Insulation: A fixer-upper offers a great opportunity to replace or add insulation. New insulation costs about $2,100 on average nationally, and can recoup $1,600 at resale — as if saving 10% to 50% on your energy bill wasn’t compelling enough.”
Lastly, they advise that you consider your own personality traits and how well you can live with disruption. If you have a limited amount of patience then a fixer upper may not be a good fit for you. Houselogic states, “Renovating a bathroom alone can take two to three weeks. Add hardwood flooring, a new kitchen, and siding, and you’re looking at a whole summer’s worth of rehab.” Not only can the projects take a while but they can also tax your emotional energy. There are inevitable pitfalls and delays that can be wearing so determining if you have the time, patience and emotional endurance prior to taking on a fixer upper would be in your best interest!
Our renovation loans take into consideration the future value of your home and provide you with the funds to complete your renovation projects, not just the cost of the home! If you would like to learn more, give our director of renovation lending a call, Joe Daly 513-602-1878