Investment property

dan · Joined: 18 Jul 2010 Posts: 2

I'm a first time home buyer and recently was attempting to purchase a home through a short sale (it fell through due to structural damage). I've kind of switched gears and decided I'd like to purchase a shell/fixer upper and remodel it. I enjoy construction/home remodeling and feel it would be a good learning experience. My goal would be to purchase the home, remodel, and then sell for hopefully a profit. However if I can't get the value I'm hoping for I'd would switch and use this as my primary residence and/or rent the home out. I'm looking to get an idea on what my options are, why type of financing/loan, and how to handle the costs of the renovations.

Here's my info
Location Baltimore, MD
Occupation - Engineer (hire date 06/08)
Salary - $70,000 yearly base.
Credit Score - 722
Debt - Approximately $4,000 in student loans
Cash in Hand - $25,000 (I'd like to keep this number as low as possible though)
Rent - $400 monthly, no lease

I would be looking to purchase a row home in the city. Shells/fixer uppers run for about 35 to 100K based on location/condition/deal.

Now I've talked with a lender and was told that I could not sell the home until one year after purchasing it (it kind of foils my primary goal). Is this true? Is there anyway around this w/o having the cash to buy and remodel outright?

Also is the any other advice and/or financing loan options you could suggest to me?

Thanks,

TimtheMortgageGuy · Joined: 16 Jan 2008 Posts: 96 Location: Rosemount, MN

I would say that you are probably not going to have enough cash for such a project. You would probably need at least 30% of the total project cost as a down payment/money into the project.

For example if you are going to purchase for $75k and do improvements for $75k you would need at least $45k of your own money into the deal. It would be a construction line of credit type loan.

There would be no restriction on how long you would have to own the property.