How to fund/Work this

So, I found a great house that I was planning on wholesaling. However, my girlfriend ended up falling in love with it.
The house needs about 20-25k, in mostly cosmetic work. There is a kitchen addition that settled and needs to be jacked up (its on posts not on cinderblocks, so my contractor said at most it should be 2.5K, not including the drywall that will crack when moved). And the roof may need repair and or replaced (5k). Most other stuff is cosmetic. carpets/floors, windows have already been replaced etc. AC already installed too.

My question is how should we fund this. She will be a first time homebuyer, so we should be able to go conventional since everything in the house works. There may be some minor electrical problems and there is a side porch that needs to be torn off, but all the systems work.

I’m wondering how we should fund the project. I am not familiar with 203k loans, but am worried it will be cumbersome. Most lenders say going conventional with the problems in an inspection that may arise could screw the deal.

And from what I understand right now getting a HELOC on a non-seasoned house is nearly impossible. We would rather not have a 20k escrow from a 203k that we don’t use up right away, but would like access to the HELOC if need be for cabinets, etc.

Also, we wanted to get in for as little money out of pocket as possible for closing and downpayment, however doing an investment loan seems to be the easiest most feasible thing right now. We can get it at 10% down of purchase price, 2pts, and 8.5% interest, one year interest only. This option is less attractive because we did not want to re-finance so quickly. I was trying to look into ways to “loan” her the money and then forgive the loan… but I don’t know alot about that.

FYI The price is 123k, arv 220-230, with 20k necessary on the high side.
My girlfriend has excellent credit 830, good secure job (Teacher) but only has about 13k to put up.
Can anyone give some ideas?



A kitchen addition that is not supported by a foundation? How do you know if jacking it up is a permenant solution? Are you in a climate where the pipes freeze? This additon sounds like it wasn’t put together properly. Do they have valid building permits for the additon and any other work done? If you’re going to buy this, have an inspection contingency and do your due diligence. At the very least you’d have accurate idea of the actual repair costs. One last thing. When you fall in love with a property (or woman), you’ll often spend more money than you normally would and you may not get rid of it when you should… :shocked :biggrin

Well it has a foundation. It is supported by several6x6’s that are cemented into the ground in those cylinder concrete footers. But since its not directly on blocks, my contractor said they should be able to jack it up and put new supports under it, or rip out the floor and put all new joists in it, since it is easy access to the underside and not tied into to an all block foundation (you can see it in the rear picture). Some idiot put plywood up around it and it looks like crap.

I know there is a chance we can go over budget, but there is room to play with a little, and this house fell into our laps, and is exactly what we are looking for.


Slow down.

There are red flags all over this deal.

  1. Your girlfriend fell in love with it. How are you going to take title? Certainly you are not going to take title together while you are not married…BIG mistake. I know you two are going to last forever, but statistics show otherwise.

  2. For God sakes, don’t renovate a house with this much work for you to live in. Why? When you add the first set of river rock for flooring in your bathroom, you will understand.

Your exact situation is how I ended up putting $100k+ into a 2bed 1bath. The house your talking about doesn’t sound easily finance able.

  1. How many of these deals have you done? If not more than 5, pick an easier one and flip this bad boy for $20k and take her out for a nice dinner.

I could go on and tell you how to structure it…but my gut feeling is telling me no deal. (I did look at all the pics)

If you decide to sell it to her, make sure to keep the transaction at arms length…meaning…separate yourself from the financial liability when the foundation issue becomes a strain on your relationship.

I know this is a little bit of tough love…but what I would have given for a little tough love before I made some of the mistakes that I have in the past.

Hope this helps,

Matt Gerchow

Let me give you some better advice (no offense to the men on this board :slight_smile: . . .

This starts with a proposal, which needs to be performed ASAP. Put your rear in a car, drive to the nearby jewelry store, and start shopping. You obviously love her, don’t make the mistake of not marrying her when you should. Women tend to remember things of that nature for a very long time.

She has great credit and a stable job, plus you obviously love her or you wouldn’t be considering this house. So what is the problem??

Next, buy the house . . . not because it’s a great investment (although it appears to be a good one), but because you will need a new house for your growing family. And (bonus) she loves the house. That’s important.

Just make sure you consider all housing options to make sure you are choosing the house that you both love the most. Spending a few thousand more, if you can afford it, could get you a house that doesn’t need as much work . . . but that’s a personal/financial decision.

Sorry I can’t offer much on the financing question . . . still trying to sort out financing puzzles on my own.

Btw . . . cute house . . .


Tina, that may or may not be a good idea. Perhaps they don’t want to get married and start a family right now. Your assuming that marriage and a growing family is what they want right now or is the right thing for them… I can tell you that I would rather have started REI before I was married and had kids. Working at a job and trying to start a business requires a lot of time and sacrifice. If he needs to be told to propose, he’s not ready… :cool :biggrin

I know, I know . . . it was mostly tongue-in-cheek late night banter. What can I say? I couldn’t sleep from howling winds and tornado concerns . . . or whatever else . . . so it just seemed like the thing to say.

Plus, as a woman, I always like to put in a little plug for the other women of the world. It’s just my style, I guess.

I certainly know that if he is not ready . . . my post will not change his mind . . . but maybe he needs a little nudge . . . . you never know, right? :bobble

Besides, his girlfriend may be feeling like this: :banghead

or this :bash

or this :guns

or this :smashpc

in which case buying a house with/for her will not help him unless they are married, anyway. :biglaugh