Question Details

Cea Larke, Home Buyer in Brooklyn, NY

Is is better to buy a more expensive house with minimal work needed or a cheaper house that you can customize completely!?

Asked by Cea Larke, Brooklyn, NY Wed Aug 31, 2011

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Great question and one that opens up a great opportunity. The answer has to align with your personal goals, both financially and for the lifestyle you want. Houses in good condition sell for more so you miss out on the opportunity to force up the value - which is exactly what investors do when they "flip" a house. There is a very unique loan program called the FHA 203k Home Renovation Loan that allows you to buy a home "as is" and include all the costs of renovations in with the loan. Homes that need repairs can be very difficult to get financing for and the simplest of repairs will stop all government loans like FHA and VA like a cracked window, missing carpet, wood trim rot, and more. Well, the way to make money in real estate is to buy homes that need a lot of work and renovate them. I used the FHA 203k program with one client who bought and renovated a home, sold it 14 months later for a $25k profit and bought another bigger home to do it again.

The other benefit is the customization aspect - why try to find a home that matches what you want exactly when you can just create it, and many times for less than you can buy it for on the open market.

When you do a FHA 203k loan, a licensed contractor does the work - its not self help although you can do some things that do not require a license and reimburse yourself for expenses only, not labor. Check out the site to get some more information on the 203k and to see some before and after pictures of my clients homes.
0 votes Thank Flag Link Thu Sep 1, 2011
Depends on the cost of acquisition and the value after completion.

However, if you intend to live in this home, there are endless other considerations others have listed below. Your ability, resources, patience, time, and of course inconvenience. Only you can place a value on the stresses these will bring into your life and the subsequent consequences.
0 votes Thank Flag Link Thu Sep 1, 2011
Miss Clarke,

A more expensive home could be in your best interest if you have not completed any home remodeling prior to this and If you have a job and family that takes up the majority of your time. The last thing you might want to do at the end of the day or on the weekend is to come home and have to start work all over again.

A cheaper house that you can customize completely also has it's advantages. You might have already worked with contractors that you trust and obviously you get to completely customize your new home.

You might want to sit down and pencil out some of your needs and wants. If you can find a house that has most of these you would then have to weigh your options (meaning $$$) against the houses you find that need to be remodeled.

There are benefits and downsides to purchasing either way. It all depends on your capabilities.

Dominic Pietrangelo
0 votes Thank Flag Link Wed Aug 31, 2011
It completely depends on how handy you are if you are going to do the work yourslef or how much you have saved to pay someone to do the work. It is often less stressfull and expensive to buy something already fixed if you are not handy. If you are handy than you can get some great deals on houses needing work and save money by doing the work yourself.
Web Reference:
0 votes Thank Flag Link Wed Aug 31, 2011
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