Just did a broker price opinion on something similar. 2nd flood bathroom was either leaking or left running. Ruined the entire first floor and the basement. Plaster walls and ceilings. Wood floors. Entire kitchen. entire basement.
You have to have a professional deal with the mold ($15,000-$30,000). Rip the sheet rock and plaster out. Mold loves sheet rock.
All the wood floors on the first floor buckled. So, those have to go along with the subflooring. Not sure how the joists are - they were still wet. Kitchen had water damage and mold, so that has to either go or be cleaned.
Here's a picture of the basement:
Oh wow what a nightmare. Is there a way to work around having a professional do it to cut back on cost. Would I be able to do most of it then have someone come in to inspect that it is good? Or because it is mold it has to be done by someone? @Christopher Phillips
If the mold is isolated to sheatrock like after storm related flooding, you could just cut out the bad sections of sheatrock and dry out the area.
When it’s this bad and mold is on all surfaces, usually a crew in proper safety gear has to come in clean the place with a mold killing solution. Sometimes water with some bleach can do it. Mold likes moisture. So, first step is dry the area out.
In the case above, 2nd floor and 1st floor were dry, but the basement floor was still wet. With a basement, it’s easier to just dry it out and cut out the moldy sheatrock and start fresh. Upstairs isn’t so easy with all the surfaces to deal with.
Replace all plumbing $3-4K if old, do not repair old plumbing and repair the molded structures. It happens to many homes built even in the 1980s....
You're correct. The FHA 203K is for owner occupant homes. You could use it to buy a 1-4 family if you plan to live in one of the units, but not for SFH if you won't live there.
The issue is that with such dire environmental issues, you won't be able to get a traditional loan product.
You would have to either use cash from your own funds or pool funds from partners, or get a hard money or private loan. There is the possibility of a FannieMae Homeready loan that is a little more lenient with investor use.
In either case, once you have the work done and get it into service, you can refinance it to a more traditional loan product.
First step is to get a clear idea of the work that needs to be done so that you protect your monthly cash flow.
Yes that is the problem I am seeming to run into, any property I find that is a deal is because it needs rehab. Problem is I only have money for a down payment on these 200k range homes not rehabbing also.
So I may have to partner up. With the fanniemae would that be something that would give me the option of rehabbing?
Before you jump into that deal you might want to check your state's disclosure and stigma laws so you know what you have to disclose when you sell the property.
If the place has been sitting for a while and the damages have been left unchecked there's a decent chance you will be looking at a substantial renovation negating all the room for potential.