which is smarter, to buy a fixer upper or build new?

Question

Iam not sure if i should by an inexpensive fixer upper or buy a small property with cash and try to get construction loan for a small house. My uncle is a retired carpenter and would do the work for no charge. I have a live in job so I wouldnt have to worry about living in the house for a while. Which do you think would be easier in terms of financing. I make a lot of my money in cash and am worried about qualifying for a loan. thanks

Answer 1

You would have to do a financial analysis. Pick out a property and figure out what it will cost you.
If you buy a fixer-upper, you can see what you are getting.
If you build a small house, it may be hard to sell in the future. There does not seem to be a demand for 50's style bungalows.
Why not figure out what you can afford and buy one you can just move into, without the headaches of fixing one up?

Answer 2

I would definatley go with the fixer-upper. Building a home is alot of hassle. And with your under the table income you may not qualify for a construction loan to build the home you want. You could probably qualify for a small loan to buy the fixer-upper and use you cash to fix it over time. Just try to buy it right! Make sure your well below market when you purchase and do the right repairs correctly. If you are planning to live there a long time, do it your way, if not, do things that the majority of people would like.

Answer 3

When living and money is concerned - think future !

If you are moving into a flat that's been there for thirty years - how will it look in thirty years from now?

If you think building is a good thing - what are your requirements? Central heating, double-glazing, solar panels, water collectors, sewage and drainage possibilities? What about the area?

If you buy a fixer upper for the hard earned cash then think what has to be changed, how much those changes might cost. What about the future of the building project? If you are young and want children - how does this parameter get filled?
Ask yourself these type of questions that only you would know the outcome - its ok to go into a fixer upper if you can get it for cheap - the prices and getting the right type of folk over to do the job might be more of a headache than first thought.
Take into consideration that delivery dates, prices and key in the door can all be a while into the future.

New is good - but is it the answer to your needs?
Planning permission? Ground? Prices? Plans? Architect? Heating and upkeep all need to be handled separately.

Answer 4

Usually it is better to do a fixer upper rather than a build new. On a fixer upper, if you are doing a rehab or remodel, you get to skip all the anoying and costly initial work needed in a brand new build.

Construction lenders will sometimes allow a rehab loan as well as a new build. If you are having trouble finding a lender, you can either just email me or just run your search.

If you want your uncle to do the work, financing might be unavailable to you. He must be approved as well as you. Most construction lenders require "Owner/Builders" to have the start up money to start the work, then get paid back with the financing. Licensed contractors, however, should already have in place their Lines of Credit to allow them to purchase their materials to get started.

Most people think the construction lender will just hand them a check for the proposed costs. What insane lender would ever do that?

Don't forget to run a search on FHA 203k!

Answer 5

Depends on if you know how to fix it up and the location as well. Just make sure that if you do fix up you get trust worthy people to do it.