Buy a new construction home, a rehabbed home or invest in an 'as is' home instead?
The question to consider before buying a home
Everything about this featured image above makes me nervous. And for a family member who was getting ready to sell a home, similar nerves settled in. When he told me he was going to sell his second home, I was initially confused. Why not just become a landlord and enjoy the steady income from rent? Or, be a landlord long enough to slowly make repairs and sell it at a higher rate? With inflation rates and a 5.77% interest rate on 30-year mortgages, renters and rent-to-own tenants are aplenty.
He wanted no parts of the process though, especially knowing the tense relationship between landlords and tenants these days—with evictions and unpaid rent on the rise due to the worldwide pandemic. More importantly though, after hearing the number of repairs and upgrades that would need to be made to get top-dollar value, he decided to sell it as is and just clean out all of the belongings.
After hearing some of the repair and upgrade list (everything from plumbing to garage improvements to heat options), I understood why these upgrades were overwhelming. He sold the home shortly after the appraisal. The buyers plan to demolish the home and rebuild it to their liking.
Before I was a homeowner, this entire plan wouldn’t have connected with me the same. But after being on a condo board and calculating some of the major repairs that needed to be made (deck upgrades, stair repairs, galvanized steel to copper plumbing), I started having serious conversations with another owner about selling the entire building. We both wondered if the association would agree to sell their units, rehab and upgrade the whole location, and then give condo association members the option to buy their units back (if they didn’t permanently move). No one was on board with this idea but the two of us.
In essence, we wanted to do the same thing as my family member. The only difference is we needed the rest of the association to get on board with this plan. Meanwhile, my family member was an audience of one.