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Turn that As-Is Farmhouse into a Historic Dream-home

You've seen it done on TV, and you're ready to tackle your own? Here are some tips to get started!

1. Know how-and what-to finance:

     Take the budget you have for your new home (how much cash can you afford to put to this project), consider how much you can afford to finance (likely purchase price minus percent down) unless paying cash for the home, and then break that down into a budget to cover both the purchase price and the renovations.  

     When it comes to purchase price, you may have some wiggle room.  However I often advise my clients to ignore how awful a property may look if they plan to completely change, renovate or update it. You want your offer to reflect the value of the property and future potential, which sometimes can be hard to see through all the neglect. If the property has been on the market for quite a while, you can, however, typically get a great deal. 

     The trickier part is financing, Lenders may be wary of financing homes that need major repair. That's why I advise clients to look at renovation loans (also called FHA 203K loans). This will allow you to finance both the property and renovation costs.  It also will give you the control to ensure all repairs, upgrades and finishes are done to your persona taste without bringing money to the table. With a traditional mortgage, you will be on your own to pay cash for the renovations. 

     To qualify for a renovation loan, you'll need to first choose the renovations you want to tackle, select licensed contractors that participate in FHA 201K financed projects and obtain bids from those contractors. You'll need to submit all that information to the lendor prior to loan approval. Once you are approved, the bank will pay each contractor as the work gets done.

     Remember, with an as-is property, you (not the seller) will pay for all repairs, no matter how large (tree roots growing through the basement floor) or small (broken windows). And you'll find surprises as you renovate. I often advise clients to budget 20 percent more than the expect on renovations to cover any defects found during the rehab process. I also recommend a licensed contractor inspect the house prior to purchase.


2. To DIY or not to DIY?

     While do-it-yourself (DIY) rehab can save you money short-term, it could create more costs long term if you're not handy. Do an honest assessment of your skills. For example, when my partner and I renovated or 1820's farmhouse, we had redone kitchens and bathrooms in prior houses, and we both have a good eye for painting and room layout/design. So, we handled those tasks ourselves, while we paid contractors to perform other work, like roofing, electrical, plumbing and HVAC upgrades.

     Also, consider clever workarounds that could help you save money. Say you don't have an eye for design,. but you have a friend whose home always looks perfect. Ask him for advice. Or, check out social media for design ideas, options and inspiration. Also, be sure to always get three quotes with references for any work you're paying to have done.

     Expect to invest serious time in a rehab. For our most recent project, we worked 9 am to 5 pm every weekend on DIY aspects for a year and a half before the property was move-in ready.


3.  Keep it or flip it?

     If  you're planning to live in your renovated property, you'll want to find a house in a neighborhood that's right for you. If you're renovating to make a profit, you'll have different considerations. You'll want to find lower priced homes in desirable neighborhoods. And you may focus more on cosmetic improvements which can be done faster, cheaper, and allow you to get the property back on the market as quickly as possible. Time is money if you'll be financing or paying taxes on a property while updating.

     No matter your inspiration, renovation projects will benefit from expert advice. Look for a Bucks County Realtor who's familiar with what it takes to complete a fixer upper. He or she can advise you on financing options, guide you through the complex loan approval process, help you identify the right property and prioritize repairs and renovations.

More info:

Dave's own restoration project:




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