Purchasing a home that needs a series of upgrades or repairs can often be a good investment for property owners. However, those who are working with a real estate lawyer in Illinois should take certain steps before buying a fixer-upper to ensure the profitability of their investment.
Determining the right home to buy
Although buyers may find a great deal on a home, there are some fixer-uppers that those purchasing property should never consider buying. These include homes that have problems with the foundation, ones that have sustained extensive rot or properties that have a serious termite problem.
Before signing a final sales agreement with the assistance of their real estate lawyer in Illinois, those buying property should also consider what the neighborhood surrounding the home they want to buy is like. If the renovations or repairs done on the home transform it into the nicest one in the neighborhood, homeowners may have a difficult time finding a buyer when they go to sell.
Purchasing the property
Future property buyers who are interested in buying a fixer-upper should keep in mind that although the original asking price for a home may be low, they may need to take out a second loan to finance the repairs and upgrades. Additionally, some lenders may be reluctant to provide homebuyers with a mortgage on a piece of property that requires an extensive amount of work.
In this situation, homebuyers may be able to acquire a 203(k) loan from the Federal Housing Administration, which are loans specifically designed for buyers interested in performing renovations. However, these loans come with certain restrictions. For example, buyers who acquire one of these mortgages are required to live in the home, prohibiting them from flipping the property to make a profit.
Understanding the work that needs to be done
Before the sale is finalized, those buying a fixer-upper should take certain steps to fully understand what work needs to be done. For example, this can be accomplished by having a professional inspection of the property performed. Additionally, buyers should remember that while some renovations are fun, others may not be as gratifying. For instance, revamping an outdated kitchen may be an enjoyable and satisfying project, but replacing the foundation’s center beam, while necessary, may not have the same effect.
There are also many other things buyers need to consider before purchasing a home that requires extensive renovations or repairs. Those who are thinking about buying a fixer-upper should consider consulting with a real estate lawyer in Illinois to receive guidance and direction with this decision.
