I'll add here that in my experience with 203K buyers, the bank has allowed them to choose a contractor (all plans must be approved by bank). I don't see where it's been said yet and I don't know how strict your bank will be but my clients were not able to use a relative that is a contractor should you have one that you were hoping to use. They had to be at arms length to be approved to do the work. Just a little tidbit in the rare case you know someone close so you don't waste valuable time getting the wrong bids.... more
Trulia, Zillow and other such websites simply accumulate data and provide a report. They are good places to start your search from, but you should by no means use only these sites for your decision. Drive through the neighborhoods, talk to neighbors, and utilize the expertise of a REALTOR to assist you in your search. Due Diligence is needed.... more
Since your question states 'home purchase' I'll assume you plan on living in the building and making it a home for a few years. Here are a few points to consider.
- Do YOU want to live in this home or location? If yes, then others will probably also find it desirable. If No, then why would you expect others to want to buy it. Don't get into a deal just because the price is low.
- Why a gut rehab? Is the place that outdated? Don't over build for the location or type of home
- What are homes in finished condition going for in the neighborhood? Assuming 5 years out with old school modest price increases can you get back what you put into it?
- What quality work are you planning on.? Low grade flipper quality works if selling the place immediately. Everything will be new and shiny. Buyers won't know the difference. If selling 3-5 years down the road you have to use quality products now. Quality work and products will still look good in 5 years. Cheap stuff will look like the place needs rehab, again.
- Code compliant or garbage work. Buyer inspections have gotten far better. Skimping now can cost you later.
- When rehabbing for resale, consider what others like and trends, not just what you like. Make it nice, not eccentric. Your eccentric might not be the same as other peoples and turn buyers off.
- Don't go will low ball estimates for work. That usually only spells trouble.
- Consider having an inspection and cost analysis done for the project.
Hope that helps... more
You will need to meet various Code and Zoning requirements. This info can be obtained from the City and County.
On the construction side
- two egress regardless of sqft due to height above grade
- Joist size will likely be your biggest cost factor. Older homes here typically have 2x6 or 2x8 attic floor joists. In a typical Chicago house these do NOT meet load requirements due to span. New 2x10,12 joists will be needed
- all light, vent, electrical, plumbing and heating requirements will need to be met for a legal unit
- Another significant factor to consider is how much actual floor space will remain after you meet kneewall height requirements. This tends to take away a lot of space.
You may want to consider hiring an inspector or architect to provide a feasibility report.
Good luck... more