Financing question - please assist
Good day everyone,
I've found myself in a goofy situation. I've found an REO property in Virginia that I wish to purchase as my primary residence, if I can get the right price. It is well within my range of affordability (asking price is around $140k), but it is a fixer-upper. My credit is good (above 700) and I have over $10,000 in savings. I earn a good salary.
There is a broken window and there are holes in several areas of the drywall, plus a few other minor problems. I wish to knock down 5 walls and replace all of the windows anyway. I'm handy, I work for an architectural products manufacturer (I even get free paint), and my dad was once a carpenter, so I'm confident that we can slay this dragon since there are no major issues with this "as is" property aside from primarily cosmetic issues. I will be replacing carpet with laminate, redoing the kitchen, painting etc.
However, it seems that I may have MAJOR problems getting a loan for THIS property. Apparently, getting a loan, FHA or traditional, is dependent upon an inspection of the property. According to lenders I have spoken with, holes in drywall and broken windows are deal breakers (I can't get a loan because of these issues).
A 203k FHA rehab loan was recommended by a lender, but that would mean that the work would have to be done by a licensed contractor, which doesn't exactly sweeten the deal since I want to do the work myself and I don't want to pay someone else to do it.
I have heard of two possible solutions. First, I can pay a contractor to use their license to do the work myself.
The second option would be to have my parents buy the property with cash. Following the purchase, my father and I would repair all that needs to be repaired for the house to pass inspection. Finally, I would purchase the house from my parents for the same amount they paid for it, or a few bucks more. Since all the work would be done at this point, there shouldn't be an issue getting a loan. However, I just heard back from one lender who said that his company would never underwrite such a purchase.
So at this point, I am just trying to figure out how to buy the darn thing. If you have ANY informed suggestions, I would GREATLY appreciate them.
Thanks!
Burns