Buy a Cheap House, Do my Own Repairs, Save Money?
Ah, so many have dreamed it; buying a cheap house with potential and fixing it up themselves.
That would be ideal for some, for others it can possibly mean biting off more than one can comfortably chew. There's another common problem inherit with that idea for most, however.
Unless you can purchase in cash, you cannot do the repairs yourself. The FHA (Federal Housing Authority) doesn't allow buyers to perform their own repairs if they are financing any portion of the sale and work must be done by FHA certified contractors. It doesn't matter what lender you use either, the rules are the same.
Before you get saddened by this fact, understand a couple of things and there's good news too. First, the law is in place for good reasons. Many buyers with good intentions purchase and start renovating, but a good number run into unforeseen financial issues, run out of funds to complete the work and some just simply don't have the expertise to properly address all concerns whether purely aesthetic or functional.
This brings the value of the house down, and consequently the value of surrounding properties. However, that's where the beauty of an FHA renovation loan like a 203k or 203b streamlined loan product. FHA loans have very low downpayments, only 3.5% and funds for needed repairs or renovations can be structured into the loan. Some "as-is" properties are priced lower because the needed repairs have a negative effect beyond what just the bones are worth, and therein lay the opportunity.
Buyers still have a lot of leeway and choice of materials and colors i.e. type of siding, windows, carpet, paint etc. Additionally, once the home is purchased and the work completed you can, of course, continue remodeling and upgrading.