By Candis Meredith
When I bought Love House, I told the owner I’d pay $75,000 cash, knowing that I didn’t have nearly that much money in the bank. I didn’t know where I was going to get that cash—I just knew I had to have the house. I had to save it so that it wouldn’t get demolished.
Since buying and renovating Love House, Andy and I have bought quite a few old homes to restore and sell. While the money from these sales helps us continue to invest in more old home renovations, we don’t always have the cash on hand to buy the houses we want to restore. However, we’ve learned a few really great ways to buy our houses even when we “can’t afford” them.
Partner with an Investor
One of the easiest ways to get enough money to buy a house for restoration is to get a hard money loan. The problem is that you’re going to have to pay 14–16% interest on the loan, and payments aren’t going to be very much fun until you’ve sold the house. If you plan on taking your time with your renovations, you could lose a lot of money with this route.
However, if you find someone who’s looking to invest in real estate, you can partner with them to buy the house without those crazy interest rates. They put up the money, and you put in the work. When you sell, they get back their initial investment, and you split the profits 50/50.
Talk to a Mortgage Lender
There are a lot of rules that apply to investment properties that don’t apply to primary residences when it comes to qualifying for a mortgage loan. However, I’ve learned that if you don’t ask, the answer is always no. If you’re buying a house that you plan on living in after you’ve renovated it (or during renovations, if it’s livable), then you might qualify to borrow not only the cost of the house but also the cost of renovations, as well.
Be a DIYer
Whether you go with an investor, a hard money lender, a mortgage lender, or any other kind of loan to get the funds for the house, the amount of work you can do on the house is limited by how much you can borrow and how much you can sell the house for.
Andy and I have made many of our old home renovations and restorations more cost effective by doing a lot of the work ourselves. We do everything we can on our own, and I act as our general contractor.
When we need other pros to come out to do the stuff we can’t do, I’m in charge of finding and hiring them, and I coordinate buying materials and supplies—everything a general contractor does. At the same time, Andy’s our project manager, so he’s on site keeping everything going. The more you can DIY, the less you have to pay others to do the work for you. And that means you can afford to do more for your renovations with less money.
I learned when I bought Love House that where there’s a will, there’s always a way, and buying a house you “can’t afford” is actually a lot easier than you might think, especially when you keep in mind your timeline and your renovation budget. Follow these tips, and you might be surprised at some of the amazing houses you can afford to buy and beautifully renovate.