Financing A Fixer Upper Short Sale or Foreclosure

One problem with the non-existent real estate recovery is the fact that many if not most of the short sales and foreclosures on the market are fixer uppers in need of repair.

For whatever reason these homes almost always have something wrong with them that will put them in this fixer-upper category. This is not surprising since there are many factors rendering these properties in poor repair. Possibly, the previous owners had money troubles with their mortgage and couldn’t sink their last pennies in to the house they would lose anyway. More often, these homes sit vacant and get vandalized or the pipes freeze over the winter. The banks hire companies that secure the properties and sometimes won’t allow the utilities to be turned on for inspections rendering them un-financeable in another way.

One would think there would be plenty of house fixer-upper/flipper investor types out there that could just be buying, fixing,flipping and selling for a profit. It is not that simple if they can’t get any financing even if they are well qualified. If one is a normal owner-occupied home purchaser and wants to jump through the proper hoops, fixer-upper or rehab loans are available (to get around the fact that banks aren’t dealing with the condition of their foreclosure portfolios). These loans are helping our economy process these properties, but there is not much out there for those wanting to get a rehab loan on a non-owner occupied home.

The problem is to get enough of these houses sold to help the housing market recover, we need the help of the American investor, who unfortunately is out of cash and needs to finance these projects. Maybe there is a landlord or property manager that would like to pick up a few more of these homes for their portfolio. They will run into the same road block if they want to finance a rehab project. Government insured loans and other programs were restricted to owner occupied purchasers in order to protect the consumer from too much investor competition, but now it is time to open the flood gates and let individual american investors make some money and take the profits back from the 1%. For now these foreclosures will continue to grow grass in their gutters until there is something promoting the rehabbing of our housing infrastructure not just by homeowners, but by the small time investor as well.

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