If you are one of the many people out there that have always wanted to purchase a fixer upper, but may not be able to obtain bank financing for one reason or another, here is a method that has worked in the past for creative and resourceful buyers.
First off, many homes that are on the market are in need of some kind of repair. These can be great money makers for investors and do-it-your-selfers. They can be purchased by either paying cash for them or via bank financing.
But what about those buyers who would like a fixer upper, but are not able to obtain a loan through a bank? Those who make an adequate amount of money per month, but through various reasons such as self employment or a hostile divorce have left their credit unworthy of bank approval. There is a way to purchase these homes – if the seller agrees – through seller financing. This method does require a down payment and funds for repairs.
When looking for a fixer upper home to purchase in this manner, there are two key factors to look for. The first element is to find a home that probably will not be eligible for bank financing due to needed repairs. These sellers usually do not have the money to fix the problems, otherwise they would have done so prior to putting the home on the market. Typically, the only way to purchase these homes is by paying cash. If the home is paid for with no underlying mortgage, the seller can elect to sell the home through a seller financed contract (Nu Wire Investments). The best way to find homes that do not have an underlying mortgage is to look for homes that are the property of an estate.
If the heirs to the estate are in need of funds, and there are no liens on the property, then you have a great mixture in the making for a perfect fixer-upper property that can be purchased through a seller financed contract. For extra insight on finding homes that are free and clear, along with information on seller financed do’s and don’ts, visit Nolo.com. Hopefully the seller can agree to accept a low down payment and the duration of a term that allows you to fix up the property and resell it to another buyer that can pay off the balance in full. You collect the difference between the price you paid for the home including necessary repairs and expenses, and the price that the new buyer pays for the home after it is all fixed up.
Just make sure that the repairs are ones that are feasible, and that the home is something you will be able to handle. Always get a thorough the home inspection and plan for the worst case scenario before making any major decisions.