Is a 'Fixer Upper' Right for you?

While several move in ready properties are available throughout the Northside community, there are also properties that present the opportunity for rehab - ranging from minor fix up to requiring a complete overhaul. Why would someone consider a 'fixer upper'? And how would someone go about making a fix up happen? There are resources available to help with planning a total home rehab, including financing programs. Additionally, a complete home rehab presents opportunities to incorporate Green building technologies and energy saving materials and devices that are definitely worth exploring.

If you are considering a property that needs some work, you need to consider a few things. First, do you need to be able to move right into a home when you purchase it? The definition of what can be 'move-in' ready can be broad, and depends in no small part on how tolerant you are of what may or may not be 'minor' inconveniences. If you have the resources to continue living in another place while you get a house ready to make your home, you will have more options in what type of condition you can purchase a home in. If not, you need to consider the practicality of calling a work in progress home. If being in an environment full of dust and debris, and rooms - including possibly baths and kitchens - in varying stages of usability, is not practical, living in a home as it's being rehabbed is probably not for you.

Unless you have a sizable chunk of change saved, you probably will need some sort of financing to either acquire or rehab a new fixer upper, or both. There are actually several homes available right now at extremely low prices that you may be able to pay cash for - some as low as $10,000 - 15,000. However, such a low price does not generally come without the need for substantial reconstruction. Even if you're extremely handy, a whole house worth of materials is a lot to finance on a Home Depot credit card. There are sources of fix up funds available. Neighborhood associations are a great place to start looking for such programs. The Harrison neighborhood, for instance, is offering up to $15,000 in fix up funds in conjunction with the Minneapolis Advantage program. Many other neighborhood organizations also offer programs to make rehab funds available to homeowners.

Another option is mortgage financing. Although a property requiring substantial work is not eligible for traditional FHA financing, there are other FHA programs designed specifically for properties requiring fix up. There are two types of loans called FHA 203k loans that allow a home buyer to purchase a home and get one mortgage for both the purchase and rehab costs. The Streamlined 203k Limited Repair Program allows buyers to finance up to an additional $35,000 of repairs into the mortgage they obtain to purchase the home. The repairs can include things like the repair or replacement of roofs, gutters, HVAC systems, plumbing and electrical systems, existing flooring, minor remodeling, purchase of appliances, weatherization, painting, accessibility improvements, window and door replacement, exterior siding replacement and more.

Properties requiring substantial and structural rehab are ideal candidates for the standard 203k program. Using this program allows a buyer to purchase a 1-4 unit property to owner occupy, and obtain one permanent, fixed rate mortgage loan to finance the purchase and fix up of the property. The program allows borrowers to finance improvements such as weatherization and other efforts to improve the home's efficiency, and permits inclusion of such expenses as the installation of solar energy equipment if desired. Finding a lender experienced in these loans is key to making the process go as smoothly as possible.

For the homebuyer willing to take on a project, the opportunities to create a personalized home incorporating the best of an old home and new building techniques, including possibilities, are unmatched.