Doing Your Due Diligence: Renovation for Real!

You are pre-qualified and know what you can afford.  After scouring the listings and looking at properties, you have found the perfect house!  When you write an offer on the desired property, be sure to include a period of due diligence of two weeks or so.  This will give you the opportunity to take care of several necessary steps to ensure you want to move forward with the purchase.  Due diligence is important whether you are buying a property to rehab or one that is move-in ready.

The first two things you need to address are getting a home inspection and a termite inspection.  In a hot market, inspectors are extremely busy, and availability is limited.  You have to get the inspection completed during the due diligence, so start calling inspectors immediately.  The home inspection is a great way to find out what NEEDS to be done as well as providing a “punch list” of things that SHOULD be done, but could possibly wait until later.  The termite inspection will determine if there is any recent or active termite infestation, and if there is a need to address those concerns. A termite inspector can also determine if there is a presence of mold that needs to be further evaluation for potential remediation.  Mold can be a deal-killer if it is extensive, as it can be costly to remove.  And since the property is being sold "AS IS", the seller is not likely to step in to pay for any repairs or removal.  

Soon after the inspection, you need to meet with a contractor to get estimates.  And just as the home inspectors are slammed right now, so are the contractors.  If you haven’t already found a contractor, you need to get busy finding one now!  Ideally, you should have a contractor at the ready before you even start the home search.

After you get your inspection report, you need to go through it and prioritize the items.  We listed our items in 5 Phases:  “HAVE to HAVES”, “NEED to HAVE” (but could wait a bit, if necessary) “Would LIKE to Have”, “ENHANCEMENTS”, and “ICING THE CAKE!” 

Once you have an itemized list of what you need/want to have done, schedule a meeting with the contractor to get estimates for the work.  It is a good idea to get a couple estimates so you can make sure you are getting the best value and quality of work you can afford.  The best way to find a good contractor is word of mouth/referral!

 For our project, our phases looked something like this: 

“HAVE TO HAVES” are things such as electrical, plumbing, roof, HVAC, structural, basic flooring, systems and environmental/hazardous conditions.  If you are getting FHA 203(K) financing, these are items that will be required by the lender. 

“NEED to HAVES” are things such as re-finishing the floors, upgrade to tile shower, new tub, vanities, painting interior, replacing door hardware, replacing light fixtures, gutters, etc.

“Would LIKE to Have” would be things such as a second oven/microwave combo, upgraded appliances, adding laundry cabinets and mud sink, butler’s pantry, bathroom additions, crown molding, painting exterior, exterior lighting upgrades, gas line to outside lights, etc.

“ENHANCEMENTS” would be crown molding, custom window treatments, room additions, adding gas to replace current stove with gas range, landscape improvements,etc.

“THE ICING ON THE CAKE!” would be room additions, wet-bar, extensive landscape improvements, etc.

IMPORTANT TO NOTE:  Not only do you need the contractor to give you estimates for cost, you need timeline estimates, as well.  What is their anticipated date of completion?  Are you planning for the entire project to be completed right away, or are you doing it in phases over time?  If the renovation is for a home that you will be moving into, what is your target move-in date and does it mesh with the contractor’s estimated date of completion?   Always allow extra time for completion, as delays are inevitable.

Based on the estimates as compared to your renovation budget, you can determine how much of the itemized list the contractors can complete up-front, and which items need to wait until a later date.  

Tomorrow, we will cover estimates, comps, value and re-negotiation:  Is it worth the investment?

Lovin' Life in the Low Country,

Janie

My mission statement:  To live each day to the fullest, with excitement, enthusiasm and a strong desire to build a successful and highly respected real estate business, earned by developing relationships through consistent and predictably high work ethic of always going above and beyond, and always doing so with a creative surprise up my sleeve.

Financing Options: Renovation for Real!

If you are buying an “AS IS” home that requires extensive restoration, you will not be able to get traditional financing such as a straight FHA or VA loan.  Depending on the amount of repairs that are necessary, you may not be able to get a conventional loan, either.  Don’t get discouraged thinking your only option in buying a fixer upper is to pay cash.  You have other options:  Renovation Loans. 

When shopping for a lender, be aware that not all lenders offer renovations loans.   If you have a preferred lender that does NOT do them, they can refer you out to someone who does.  Gateway Mortgage is one company that does them. They know the process and do it well.  Gracen Watts is the Charleston-area contact that I work with. Get in touch with her here:  http://www.gatewayloan.com/officers/gracen-watts/

Renovation loans are added to the purchase price of the house, and financed into your mortgage.  FHA offers a renovation loan called a 203(k) loan.  This type loan requires a minimum down payment of 3.5% of the total loan-to-value. The lender will require you to get a home inspection by a 203(k) certified inspector, (which costs 2-3 times more than a regular home inspection), and you will have to get a 203(k) certified contractor to will do the work.  These inspectors and contractors are hard to find, so going FHA 203(k) may not be the easiest route to take.

Another, more cost-efficient, less stressful renovation loan is a conventional renovation loan, called HomeStyle. This loan requires a minimum 5% loan-to-value down payment.  Your home inspection can be any licensed home inspector, and your contractor must be licensed and approved by the lender.    What if you are purchasing the property as an investment that you plan to “flip”?  Your required down payment is 15% loan to value.

Let’s take a look at an example:  Your lender pre-qualifies you for $300,000.  You find a house you want to purchase that your Realtor® has negotiated down to a price of $225,000.   This leaves you with the option to use $75,000 for your renovation budget.  The house will show up as a sale price of $225,000 in the tax records, but your mortgage will be for $300,000 minus your 5% down payment.  The total loan amount you will finance is $285,000.  Once you get the A-OK, thumbs-up, pre-qualification letter from your lender, you are good to go make an offer!  Once your Realtor® negotiates your best deal, all terms are agreed upon, the contract is ratified, and you've performed your due diligence, your lender will order an appraisal.  As long as the post-construction value of the home is $300,000 (the total mortgage, which is $300,000 for this example), or more, you are good to go!

Tomorrow, we will cover what needs to happen during your period of due diligence, prior to the appraisal being ordered.  

For more information about renovation loans and pre-qualification, give me a call and I will put you in touch with a lender in your area that can best serve your needs.  Or contact your preferred lender and they can refer you to someone that services renovation loans. And of course, if you are interested in pursuing the purchase or sale of real estate in the greater-Charleston area, give me a call!

Lovin' Life in the Lowcountry,

Janie

My mission statement:  To live each day to the fullest, with excitement, enthusiasm and a strong desire to build a successful and highly respected real estate business, earned by developing relationships through consistent and predictably high work ethic of always going above and beyond, and always doing so with a creative surprise up my sleeve.

Renovation for Real: Getting Started

Enter HGTV and all its fixer-upper, flip or flop, property brother shows that make it look so easy and effortless.  Just turn it over to the pros and they will move walls and pipes to turn that Pepto pink, mint green, purple carpeted shack into your dream castle.  Piece of cake, right?

Not so fast.  While HGTV has a lot of great reality shows, it IS still entertainment media.  And, as in any renovation project, large or small, there are steps, details, and a lot of “behind the scenes” activity that has to happen to pull off a successful renovation.  The activity you don't always see on tv is the non-glamorous, hard work and stressful details that go into pulling it off.

Now don’t get me wrong:  I LOVE HGTV.  I personally know the creator of the network that launched in the mid-90’s, and admire his brilliant vision that has since become a household acronym.  And by the way...I love me some Property Brothers!  (This was taken at the NAR Annual Conference in San Diego, November 2015.  Too bad I didn't know I was going to buy a fixer upper when I got to meet them!) But reality tv and REALITY are not the same thing.  HGTV is for stimulating vision to share with the experts you will hire to do the jobs you aren’t qualified to do yourself. 

One of the experts you need to start with would be me.  Or, a Realtor you know, like and trust…(And preferably, someone experienced with buying and selling distressed properties).  I am a licensed Realtor.  An expert in real estate.  I am NOT a contractor.  I am NOT a plumber.  I am NOT an electrician.  I am NOT a carpenter.  I don’t lay tile.  I don’t replace roofs or HVAC units.  When you want something done right, you hire an expert.  I can’t tell you how many houses I have walked into that were DIY disasters that could have been avoided had the right professional been hired from the start. 

So let’s get started with the process.  You have decided you want to buy a fixer-upper.  You hire someone like me to represent you as your Realtor, to make sure the purchase goes smoothly from start to finish.  What comes next?

Financing!   How do you plan to finance the purchase of the home?  Are you paying cash or will you need to get financing from a lender?  When you plan to purchase a home, whether it is a fixer-upper or move-in ready, financing must be addressed before you get started.  Knowing your options will help you determine what to look for.

Tomorrow, we will go over financing options that are available.  (You have more options that you think!)  If you have any questions as we walk through the process, please comment or give me a call!  I can be reached on my cell phone at 478-973-2684 or you can email me at Janie.pugh@carolinaoneplus.com

Lovin' Life in the Lowcountry,

Janie

My mission statement:  To live each day to the fullest, with excitement, enthusiasm and a strong desire to build a successful and highly respected real estate business, earned by developing relationships through consistent and predictably high work ethic of always going above and beyond, and always doing so with a creative surprise up my sleeve.

Flip, Flop, Fix, Up...Renovation for Real!

Now that the real estate market is heating up, it seems people are getting excited about buying and selling homes again.  The problem with a hot market is the lack of supply to meet the needs of the people that are looking to buy.  Depending on which market you live, you may find yourself challenged to find that perfect home that fits into your budget.  As a Realtor, I work with clients every day that are frustrated when they can’t find that perfect home.  As a consumer, I recently joined the thousands of other folks in the greater Charleston market in trying to find that perfect home for me and my family.  And we, too, became frustrated.  Homes would come on the market and within days (and sometimes hours) had ratified contracts on them. 

When you move from one market to another (and in our case, from one state to another), you will likely find a big difference is home styles and prices.  In some cases, it will work to your advantage.  In others, if might make it harder to afford what you previously had.  Before getting disappointed, it is important to look at all factors that will affect the ultimate affordability of your new home.  For instance, tax rates vary from state to state, so what may seem like an unobtainable goal is simply a matter of how your monthly payment breaks down.  In our case, we moved from an area where the tax rate was almost three times what it is in our new market.  So we were able to afford a higher purchase price since our annual taxes were so much less.  In order to find out what price you can afford in your particular area, you have to start by getting pre-qualified.  (We will go over that in more detail in the next post.)

So what about a fixer-upper?  Would we be able to get what we wanted if we went that route?  Hmmmm.....

Several years ago, before moving to Charleston, my husband and I started talking about a career goal to expand my real estate business into a family business of buying and selling fixer uppers.  Since I have the real estate expertise, my daughter is an interior designer and my husband has man-power forecasting and project management experience, it seemed like a natural progression for my career.  Little did we know, our first “project” would be our own home that just so happened as the result of a random drive through a neighborhood and seeing a crooked “For Sale By Owner” sign on a house with broken, cobweb-covered porch lights, overgrown ivy-covered brick exterior, but an amazing park-like yard.

Join me for this daily blog-series as we walk through the process of buying a fixer-upper, from start to finish.  Starting with the pre-qualification process, we will move through the day-to-day expectations to celebrating the final product!

Lovin' Life in the Lowcountry,

Janie

My mission statement:  To live each day to the fullest, with excitement, enthusiasm and a strong desire to build a successful and highly respected real estate business, earned by developing relationships through consistent and predictably high work ethic of always going above and beyond, and always doing so with a creative surprise up my sleeve.

Handicapped-Accessible Home For Sale in Charleston (Summerville), SC

Listing Price:  $169,500

Just listed, this 1,593 square foot, all-brick, single-story home sits toward the back of a quiet cul-de-sac. The home is handicapped accessible, including walk-in shower, walk-in jetted bathtub/spa, safety bars and ramps. Enjoy 2 separate living areas, one with a wood-burning fireplace. The family room looks out to the large sun room with new vinyl windows and hot tub. Easily access the large privacy-fenced back yard that has an extra parking pad large enough for boats, an RV, etc. Spacious workshop built onto the back of the house, and storage shed in back yard are a great place for tools and lawn equipment. The garage has been converted to heated/cooled living space that is a perfect playroom, media or game room. The 2-car carport is large enough to hold over-sized vehicles. Large laundry room with cabinets and room for extra storage shelves. 

Call me at 843-410-9906 for more information or to schedule a tour of this conveniently located home.

Lovin' Life in the Lowcountry,

Janie

My mission statement:  To live each day to the fullest, with excitement, enthusiasm and a strong desire to build a successful and highly respected real estate business, earned by developing relationships through consistent and predictably high work ethic of always going above and beyond, and always doing so with a creative surprise up my sleeve.

Dreaming Big and Leaving a Little Sparkle Wherever You Go!

Three weeks into the New Year....How are you holding up on your "Resolutions"?  I decided not to use the "R" word, and instead, am working to keep my GOALS in check.

As I sat down with my notes to plan for this week, I started by looking at what happened last week to define my focus for the upcoming week. At the beginning of the year, I decided my motivation would get momentum if  I wrote down and celebrated the good things that happen along the way to achieving the big goals. But not only do I celebrate getting to check things off on my "Ta-Da" list, but I love it when I get to be a part of someone else's celebration and leave a little sparkle along the way!

So this week, the sparkle was left......

1.  At the house I just listed.  I hired a professional home stager to come out to prepare for the home for photos.  The transformation was amazing, and my client/home owner was absolutely thrilled!  

2.  At the class I taught my fellow agents.  I had the privilege to teach some of the newer agents in my office, (as well as some of the more seasoned), about keeping business models, plans and goals at the forefront of their minds.  I love to share things I have learned over the years, but also to interact with others to brainstorm ideas.  We all need to stay open to learning from each other every day.  

3.  At the business lunch I attended with a new referring partner.  After attending a networking event week before last, I had lunch with someone I had met along with another potential referring partner in his office. Business is so much more productive when you have a strong referring partnership with those you know.

4.  At my Carolina One awards night.  Confetti, glitz, sparkle and glam was everywhere on Saturday night when my brokerage hosted its annual awards night at the Charleston Music Hall, recognizing leaders in all phases of our company, and their contributions and hard work in our industry.  A night to celebrate accomplishments of so many goals!

5.  On the football field.  I love that both teams I was pulling for to go to the Super Bowl, won!  LOTS of sparkle on those fields!

6.  At my church.  My church is in growth mode, and we just had our first contemporary service to add a new dimension to the choice of worship within the same church:  traditional or contemporary. The service was wonderful and it is a pleasure to see the vision and dreams of the church being realized!

Keeping goals in sight, let's see how much sparkle we can leave this week!

"It's about dreaming big and doing whatever is necessary, day after day, to make those dreams come true."  -Peyton Manning

Lovin' Life in the Lowcountry,

Janie

My mission statement:  To live each day to the fullest, with excitement, enthusiasm and a strong desire to build a successful and highly respected real estate business, earned by developing relationships through consistent and predictably high work ethic of always going above and beyond, and always doing so with a creative surprise up my sleeve.

   

329 Slow Mill Drive in Goose Creek, SC

First time home buyers or those looking for a sweet investment property----take a look at this!

3 bedroom, 2-1/2 bath home in Liberty Hall Plantation is now available for sale for $169,900. This 1,664 square foot home is perfect for first time home buyers or investors looking for rental income! Full of upgrades throughout, you will love the look and feel of this great home! For more details or to schedule a tour, please call me at Carolina One Real Estate, 478-973-2684. Or go to my website at www.janiepughsellshomes.com

Lovin' Life in the Lowcountry,

Janie

My mission statement:  To live each day to the fullest, with excitement, enthusiasm and a strong desire to build a successful and highly respected real estate business, earned by developing relationships through consistent and predictably high work ethic of always going above and beyond, and always doing so with a creative surprise up my sleeve.