Good morning everyone! So I have a question. If I don't have enough money to renovate the house but I have the amount to pay a house in cash, should I go ahead and buy the property or should I wait until I have sufficient money to do both.
I was thinking about buying it and living in it for a couple of months and using money from a fulltime job to pay for renovations. I'm trying not to use the bank on the first property I buy since the house will be under 25k. Any suggestions?
Before you can answer that questions, you need answers the the "short list" of questions below:
1 How's your credit?
2 How long will the renovations take?
3 Do you have the crews in place to do the rehab?
4 What are you going to do with the property after you rehab it (exit strategy)?
5 What is the projected value of the property after rehab?
1 Why don't you want to use the bank?
2 Do you have access to 0% interest credit cards of Line of Credit?
3 Do you have access to a potential partner ($25k is pretty small amount)?
4 What is the cost of the property?
@Tia Anderson Tia, my first question would be; will buying the house in cash deplete all of your cash available? Bc if that is the case, I would say hold off buying anything until you would have enough cash to (comfortably) buy and still have some cash left over for an emergency or cushion.
If that's not the case, I would get a a few trusted contractors in the property to give you estimates on the cost of the upgrades. After that I would take the highest along with the cheapest and throw them both away. Take the most reasonable estimate, add in a 10% contingency and calculate how long living at your salary it would take to complete these repairs. And if you are comfortable living that long in a rehab then go for it!
Hope this helps.
Thank you everyone. I have great credit but since my partner and I would be fresh out of college, just starting out with no long history of work, we are skeptical of using the bank until we have established at least a full year of work.
As far as the property, we are expecting to make it a rental property. The property is $23000 with the other homes on the block ranging from $56k to 106k. Since we would be dependent on our own income, we thought living in the rental would be appropriate and not rushing. Therefore the rehab would take from 2-5 months. Basically, we just want to get in the business, but we want to make sure it's the right time.
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