[Continued from the post immediately below this, read there then finish here. This will later be consolidated into a blog post]
In my area, many people are buying homes that were built in the 50's that had a lot of wasted space above the garage. They're buying or refinancing and adding additions above the garage. Typically though, a garage's foundation isn't poured to withstand the weight of cars+an addition on top of it so the garage foundation needs to be partially dug out and new concrete must be poured that can withstand a much higher weight per square inch. After that's done, they build the addition and walla, you have a new bedroom!
If you're an investor looking to do some rehabbing, there is a product just like the 203k that investors can use as well or you can use to renovate a second home, say a vacation home by the lake or in the mountains, etc. This post is already extremely long so I'll leave that discussion for a blog or another post. Feel free to check out other posts about rehab financing in my past blogs.
After all this typing, I may turn this into a blog post, don't be surprised if you see me re-post it. :)
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