Use a down payment assistance program or not?

If you’re still using Facebook, you know there’s a group for everything from different breeds of dogs and cats, to silly games that lead to data mining of your information for commercial or nefarious purposes, to groups that offer advice on certain medical problems, to all things real estate.

One of the Facebook groups I participate in allows users to share do-it-yourself home improvement tips. It’s a bit like HGTV or the DIY Network, with an added dose of reality.

Simple topics might include improving curb appeal, choosing paint colors, installing flooring, replacing an electrical fixture, or changing toilets.

Sometimes contractors weigh in on more complicated jobs and even give an idea of ​​how long a project will take and how much it will cost in a particular region of the country.

It constantly amazes me how little people know about how their home works. I blame the seller’s market over the past few years, where inspections are short or non-existent, for a lot of that.

It used to be that an inspector would spend many hours with a buyer, reviewing the condition and operation of a home’s systems and fixtures, providing a written report and even including a workbook explaining how to fix simple items or when to perform general operations. maintenance.

The advent of the “walk and talk” inspection, conducted before making an offer, has shortened this process. A buyer should take their own notes as the inspector was talking and pointing things out. Often the buyer would come home with information in cryptic shorthand that made no sense a few weeks later.

Some people still consider themselves house swimmers, determined to make a huge profit by doing a few choice renovations and reselling a house. My Facebook group often brings out those who want to but lack the skills or funding.

A person recently posted photos of a house he wanted to renovate for profit. His first question was whether he could remove all the mold himself or if he should hire a professional mold remediation company.

I looked at the pictures and immediately thought of Tyvec suits, respirators and those films where the CDC warns of a toxic environment that needs to be contained and toxins eradicated – not my idea of ​​a DIY project .

Another unrealistic aspect of this renovation was its cost estimate – $100,000 to cover mold removal, a new roof, central air conditioning and heating and, of course, new electrical, plumbing, drywall , light fixtures, cabinets and appliances. Even with the house priced at $175,000 and a potential value of $400,000 after renovations, professional palms told him he lived in La-La-Land.

DMV hobbyists have seen their options dry up over the past five years, as even distressed properties left in poor condition can sell for half a million dollars or more. Even professionals are knocking on doors, sending postcards to desired neighborhoods, and calling or texting landlords and real estate agents, looking for properties to fix and flip.

Still, if you’re inclined to try rehab, even for your own home, here are my top five things to consider before diving in.

• Find out what permits you will need and the process and time frame for obtaining them, otherwise you could be faced with the dreaded orange stop work order posted on the window of the house.

• Find an architect and/or engineer to help you plan the layout. Remember that not all walls can be knocked down to create an open concept floor plan without supporting it in some other approved way.

• Learn about “hard money”. Unlike traditional home loans which are based on income, assets and credit, these short-term, high-interest loans are based on the difference between what you pay for the home (“as is” value) and the value “as renovated”. is estimated at resale.

• Consult a real estate agent about popular features and finishes to help you sell the home quickly and get the top price. Purchase these items locally to avoid supply chain delays.

• Budget for unforeseen cost overruns of 10-15%. Even with an interest-only loan with no payments due until resale, you will still have to pay taxes and insurance and make periodic payments for materials and labor. Don’t forget to add commissions and closing costs on buying and selling.

Your first project may not bring you the expected profit, but it will give you an idea of ​​the value of trying again or leaving the renovations to the professionals.

Valerie M. Blake is a licensed associate broker in DC, Maryland and Virginia with RLAH Real Estate / @properties. Call or text her at 202-246-8602, email her via DCHomeQuest.comor follow her on Facebook at Levrai8des affaires.

About Matthew R. Dailey

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