Use a Florida Mortgage Loan on a Fixer-Upper
As most prospective buyers are aware of, Florida mortgage rates are currently in the mid-6 percent interest range. This could makde it difficult to afford the larger homes they could’ve purchased 12 months ago.
But what about fixer-uppers? These pieces of property can be the solution for home buyers willing to buy a less-than-perfect house. The key, of course, is to focus on long-term profit potential. You may need a Florida home improvement loan to accomplish such a goal, but those aren’t hard to come by.
Choosing the right type of home
Experienced real estate investors recommend buying a property “with the right things wrong.” In other words, you should focus on a house or condominium where well-spent dollars will add lead to more market value down the line than the cost of such renovations.
For example, fresh paint, inside and outside, is known as the most profitable home improvement you can make. Virtually every house can benefit from this enhanced look.
Other suggested home improvements include adding a second bathroom to a one-bathroom house, installing new light fixtures, adding fresh landscaping, and installing new carpets or hardwood floors. These are known as “cosmetic improvements” because they usually aren’t very expensive - but they can give the home a new look and feel, causing that Florida home mortgage you took out on it to be well worth the cost come selling time.
Be wary of useless home improvements. Smart buyers of “fixer” homes avoid misallocating their money and going forward with expensive improvements that add little or no market value.
The best example of such spending is a new roof. When you spot a house for sale that has curled-up shingles, it’ll probably leak soon if it hasn’t already. If you buy that house and deduct $5,000 (for instance) for the cost of a new roof, you’ll be lucky if spending that cash a new roof equates $5,000 in market value. More likely, it won’t add any value because home buyers expect houses with roofs which don’t leak. You’ve gotta think ahead.
Think about marginal improvments. In addition to the “profitable” and “unprofitable” home fix-up work, the third category is known as “nice to have” marginal improvements.
If you plan to use a Florida mortgage loan on a residence you’ll remain in for at least five year, you probably want to make these renovations simply to increase your own enjoyment. But consider yourself lucky if they add as much market value as they cost.
The two major examples are kitchen and bathroom renovations. Room additions, such as adding a family room or another bedroom, also fall into this category. Adding a swimming pool, surprisingly, can often hurt the marketability of a home because buyers with small children frequently won’t even consider this sort of danger.
When should you sell your fixer-upper? Among the reasons fixer-upper houses and condos become available are (1) distress properties such as foreclosures, (2) the seller doesn’t want or can’t afford to fix up, (3) an heir inherited the property and wants a quick cash sale, and (4) a well-located but run-down house has become a “tear down” on a valuable lot to be replaced by a brand-new house.
Home sellers who don’t want to be bothered fixing up their homes for sale usually pay the penalty in a greatly reduced sales price. But buyers willing to consider Florida home loans on these kinds of purchases could make out very well in the deal.
If you or your mate enjoy home decorating, buying a fixer house or condo can become a profitable, tax-free business. Thanks to Internal Revenue Code 121, primary-residence owner-occupants can earn up to $250,000 tax-free profits upon resale - it’s a pretty major tax benefit of home ownership.
To qualify, you must own and occupy your principal residence at least 24 of the 60 months before its profitable resale. If this is the case and you follow the proper steps, a financial windfall could come your way.
