Home Buying in New Orleans>Question Details

Matthew Greig, Home Buyer in New Orleans, LA

Is it possible to buy a beat up house without going the FHA 203(k)/construction loan route?

Asked by Matthew Greig, New Orleans, LA Tue Jun 2, 2009

I have my heart set on a house that has some issues. The siding needs work, one wall is pulling away from the structure, there might be some foundational issues, and there are a couple holes in the interior ceilings. Misc other things - it's very old.

I've been talking to lenders and brokers and they keep saying FHA 203(k) or construction/renovation loan. Their concern is the bank won't lend the money regardless of how it appraises because of the damage.

My question is how are people buying these houses? There are gazillions of houses that don't meet the strict standards of the FHA. This particular housed was purchased in 2006, and I know the damage didn't all happen in the past three years - how did the current occupant get a loan?

Is it possible any more to buy an old house free and clear without someone looking over your shoulder, forcing you to hire contractors, etc.? I see this as a long term project where I do the bulk of the work myself, on my own schedule.


Help the community by answering this question:


Sure is a way...I did it several times, and helped others do the same. It takes some experience, skill and homework to structure such a loan...a form of a bond for deed and / or owner financing.

Alot depends on the following:
1) Your credit
2) What the property will be worth after renovations
3) The timeframe you plan on renovating.

Email me for details. I bought one place with a downpayment of borrowed money, got rent the 1st day I bought it, then when I sold the property and made over $150K. Each time was a little different but the same process...alot of risk, elbow grease and ability to reach beyond the norm.
Web Reference: http://iansellsnola.com
1 vote Thank Flag Link Tue Jun 2, 2009

It is true that most banks would not lend money if they feel the collateral is not at good condition. If they do, they would want to see it being repaired asap and meet certain safety code and standards. Unfortunately, there are people who do not take care of properties or don't have the financial / skill resources to maintain and walk away leaving banks properties that are difficult to resell as is.

Of course, most resell houses have some kind of wear and tear because of time and people lived in them. Slight leveling problems are usual, some tears of sidings are normal too because of the hurricanes. However, if you are talking about a wall pulling away, foundation and other issues... you are talking about potential structural problems that some lenders would want to avoid. Or, would you even feel comfortable living in there while the wall is falling over and that you are willing to take time for it to deteriorate more?

Maybe you can get a contractor's estimate or ask the seller to provide an inspection report so that you can present the reports to your lender and see whether it fits the conventional loan or it is really so bad that you need the renovation loan and work with a licensed contractor.

If it cost more to hire a contractor, then you can certainly consider making a lower offer for the house.

Good Luck!

Celine Fang
Residential Property - Private Financing Consultant
Immi-Nest, LLC

Ask me about Seller Financing: 560 Credit Scores, 5% Down Payment, 30 Yr Fix Financing.
0 votes Thank Flag Link Tue Jun 2, 2009
Geat answer Ian. This is the only way I can see you structure a deal with the strict lender standards.
0 votes Thank Flag Link Tue Jun 2, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer