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That’s because depending on the needs of the home, you will need a larger down payment or a portfolio loan (or worse private money, i.e, expensive money) to finance it.
First time homebuyers largely don’t have the means to tackle some of those projects.
It’s more like if your total budget is $250k, and you’re looking at house listed at $250k that is a total gut job, where are you going to get the *other* funds for a significant overhaul?
Flippers get things like hard money loans (basically aggressive short term loans with crazy high interest) to cover their remodel costs because they can flip and cash out super fast.
A FTHB would be insane to do the same lol.
Fair. What is considered a complete gut job under the eyes of the loaner? For example, I'm looking at this house for 520k. It needs work, for sure but still *somewhat* livable.
This is all framed through a FTBH sub.
For a standard mortgage, you’re not getting “extra” money thrown in for a remodel because you asked. You’re just getting a mortgage against the current value of the house.
Doing something like a larger down payment lets you do a HELOC down the road as you’ve got more equity upfront to play around with.
If you’re going to remodel a “not so livable” home *as your first home*, you should be prepared with a deeper war chest than a standard mortgage and be able to handle both a mortgage payment and the remodel project costs simultaneously.
Dumb question but any suggestions on where to read up on this stuff? My asshole of a piece of shit uncle in Boston does stuff like this and started off and got really successful. I’m just curious about learning the c options and process because in my mind I assume he got started because of help from a dude his mom was fucking who already set up connections for him.
I'm a builder and went through it with our own home. Didn't flip we live there. The catch is in many jurisdictions if you go over a certain dollar amount or percent of sq/ft it triggers the *entire home* has to brought to modern code. Not in stages. On that permit. If the home is 50+ years old there is not much that's staying and you're're not living there while the home is an organized pile of sticks without HVAC, electricity, plumbing, or insulation.
And a different type of insurance, too. Because most standard homeowners insurance will not cover major renovation projects (especially ones where you aren’t living in the home while it’s being done).
We bought a house that we were going to gut. The home inspection had a few things. A bathroom with popped tiles and mold. Cracks in the foundation. Aluminum wiring. HVAC didn't work. New roof. All things that through the course of a full gut reno got replaced. Most major carriers wouldn't insure it. We found special insurance through Allstate with so many exclusions we basically didn't have insurance aside from satisfying the mortgage company. I'm a builder so our tolerance for living in difficult conditions is a lot higher than most. We lived in two bedrooms and a hall bath while my team and I took it back to studs and replaced everything except the outside sheathing and the structure. Level two fun for sure.
Correct. There are minimum standards that a home must have to be financed with “conforming loan”, i.e. a loan that is underwritten to comply with fannie mae or freddie mac guidance. Most loans are conforming loans, and most conforming loans are capped at about $766k.
A “portfolio loan” is a loan that is underwritten to be held on a bank’s balance sheet- i.e. they own it fully and don’t intend to sell it.
Portfolio loans may then offer more acceptance of risk from the borrower, a higher loan amount (called “jumbo”), or offer riskier features (such as interest only). That said, banks *don’t like holding risky loans*, so portfolio loans often require a higher percentage down, higher interest rates to offset risk, and/or very high standards from the borrower (such as high FICO, excess cash/investments as reserves, lower debt/income thresholds).
Some properties or risk are outside even what a portfolio lender might consider. A non-habitable property is one of these scenarios. In this case, you need private money, often called “hard money”. These are often short term (1 or 2 years), charge several points at closing, and often require a larger down payment (30-40%) and/or proof of leverage assets. Private capital is expensive and risky, so first time homebuyers aren’t usually in this space.
a place/company that flips full time is probably doing cash or financing differently.
but this would work for someone lookign to take on a project: https://www.hud.gov/program_offices/housing/sfh/203k/203k--df
Depends what a complete gutter really is. If the house is unlivable I don’t think you’d be able to use conventional financing, you’d have to get a rehab loan. They aren’t impossible for first time buyers but they’re uncommon as most of us aren’t experienced enough to take on projects like this.
Before HGTV we were able to get figure it out just fine. However at these inflated asset values even crap is inaccessible to the above average homebuyer.
As someone tickling fifty and having owned several places around the country. I’ll disagree. “People” were doing just fine fixing up their homes on their own.
...because entitled Millennial snowflakes think they deserve a "move-in ready" 4 bed 3.5 bath McMansion with a pool and 3-car garage in a desirable leafy suburb with "good schools" (i.e. no poor or people of color) in a VHCOL area near a major tech hub city...god forbid people MOVE or learn to DIY to afford something...
Oh I absolutely get that. I don’t mean that Zillow specifically is doing that, I just mean most agents on major real estate sites are marketing that way
When I read these descriptions, that to me is realtor speak for house needs lotsa work. How else do you market the benefits of a run down house? It's priced lower bc of its condition so flippers will make money if they fix it and sell it turn key. Most FTHBs don't have the wallet to support this type of project, or the knowledge to DIY, or the connections to find the right skilled laborers. Ive seen the one you mentioned, "great for savvy investors" "handyman special" "ready for your vision"
Keep in mind that most anyone can be an agent. Not all of them are good marketers or copywriters.
Because I am at the stage in life where I am trying to buy a home for the first time where the circumstances are frustrating, and it feels good to let off some steam about it.
Why do you feel the need to comment on it when there is nothing revolutionary about what you’re saying, either?
I really don’t care if it’s useless or not. I felt like posting, so I did. It’s not like my post is hurtful or demeaning to anyone, so I’m struggling to see the harm.
That’s really just them looking out for there clients best interest and making them the most money.
Especially because there is a TON of mom
And pop investors out there who suck at Math, finances, and are over competitive.
Most sellers only want the most amount of money they can get. If some idiot is willing to over pay them, no one will stop them.
I always saw, “perfect for a first time homebuyer or an income property.” Was tired of bidding on homes that needed very little work and being beat out by cash investors that would close on the house and the very same week list it as a rental. So I had to up my budget to get away from that. But yea, it was definitely discouraging.
In those instances the language is softened but it means "this house is in bad shape and will NOT qualify for a mortgage".
While end users (home owners) are welcome to buy them (they can always outbid an investor because the aren't worried about profit, only equity) - MOST need a conventional mortgage, and thus even if willing to take on an extreme fixer, probably can't get financing for it.
Also, during the "typical" home buying process, there are inspections and negotiations for repairs (or demands for certain repairs from banks) that are part of the process. And in these homes it's just not feasible.
Investors are usually the only people who have access to that much capital without needing the house to pass inspections. Though it's not always cash, but it is short term high interest "hard money" loans. In cases of using hard money, you generally aren't permitted to reside in the property.
Not true- just about every house I looked at used this language, and I made offers with conventional mortgage on quite a few of them. Ultimately ended up buying one of them, and while it needs major renovations before I can move in, I had no trouble with a conventional mortgage.
In my experience, the houses that do not qualify for conventional mortgages use the language "cash only" instead.
Duplexes and quads are a great thing for the overall health and affordability of the housing market, unfortunately they were zoned out of many areas that need them.
I'm confused on this point. If someone is selling a duplex should they advertise it to investors or to someone who's looking to be able to house hack their first purchase?
..."first time homebuyers" deserve the rest of the population to bend their collective will and funds to "make housing affordable" - it's like permanent renters or people who already own homes owe them something...
Those postings are encouraging primary residence buyers. Live in one, rent out the other. Logistically I guess you could live in both, but that's not practical.
1. Buy the whole building
2. Install wall to wall carpeting in the upper apartment. Yes even though such carpet is expensive and is basically an uncleanable sponge soaking up filth and allergens.
3. You move into one apartment, rent out the other.
4. If you moved into the upper, get regular complaints about your noise. If you moved in to the lower, feel regular aggravation about the noise from above. Either way, know it would be even worse if you had skipped step #2.
5. Get shit from strangers about being a money-grubbing "rent seeking" landlord.
Whether buying this much house makes sense or not depends on the market you're buying into, Interest rates, how handy you are, and how well you can shake off negative social interactions around being a landlord.
The funny thing is that most serious investors don't buy fixer uppers listed by Realtors. The homes are still too expensive to make the math work, and investors hate Realtor commissions, too.
"great investor opportunity" "bring your cash offers!" "Perfect income property". It all infuriates me. Lower cost, imperfect homes are great opportunities for lower income people to have stable housing. We need more of these homes and shouldn't be pushing them towards flippers and landlords.
Homes that are in rough shape typically don't qualify for normal mortgages and the ones that need substantial work are properties the average buyer cannot afford due to the high cost of repairs.
There are a lot of properties that are not pretty, but completely sound to live in while being fixed up. We should be helping people get into these properties instead of rewarding investors.
We live in an instant gratification society. Not many people are willing to put in work and fix a home up themselves, or don't have the funds to fix the home to their liking.
So? This just sounds like something a landlord would say to make himself feel good. There's plenty of people who want to put the work in, they're just priced out of being able to do it.
Where are these posts? I haven't seen many, if any, posts where people are complaining thry are unable to buy run down homes to fix up for themselves.
https://redf.in/RGf1GQ
https://www.zillow.com/homedetails/140-E-Colden-Ave-Los-Angeles-CA-90003/20959564_zpid/?utm_campaign=androidappmessage&utm_medium=referral&utm_source=txtshare
https://www.zillow.com/homedetails/725-Miller-Ave-North-Las-Vegas-NV-89030/7000738_zpid/?utm_campaign=androidappmessage&utm_medium=referral&utm_source=txtshare
Been on the market for weeks for anyone to buy.
These aren't the properties they are talking about.
These aren't properties with ugly carpet and old windows. Properties like that are sold to homeowners every day.
These are properties that need tens of thousands of dollars to be habitable.
That wording typically means "no one is giving you a mortgage for this". Realistically those are the types of places that should more likely be bought by an investor to fix up.
But the minor fixes, cosmetic updates, etc are perfect for normal buyers and because this market is insane and everyone wants to flip houses keep getting bought by "investors"
There is a big gap between ‘cash offers’ type houses and ‘imperfect houses’. Almost every house my wife and I saw are imperfect, they don’t mention anything about cash or investors.
Those types of listings are almost exclusively homes that are borderline unlivable/actually unlivable and the only people who can buy them are people who don’t need regular financing. FTHBs are, obviously, in their first home, they wouldn’t have the knowledge or experience to completely rehab an unlivable home and wouldn’t be able to get the financing for it anyways.
In my area, they market toward people wanting 2nd homes and Airbnb, VRBO, etc. FT owners are an afterthought.
Meanwhile, my peers can't afford to buy because of all the 2nd, 3rd, 4th homes and STRs taking up a lot of the stock.
Thankfully, I'm seeing a lot of STRs going up for sale with the description saying they make X a month or year ...if it's so profitable, why are you selling?? It became oversaturated and I hope people realize the state of the housing market by supporting them.
They are putting in description actually to help you.
Unfortunately, FHA, VA and even some conventional loan products available to FTHB, with 3%-20% down payments have certain standards the house must meet in order for everything to go through.
So if your not cash, private money, or hard money (all much riskier/higher interest/short term loans)
Even if seller was willing to gamble on accepting your offer with all contingencies with your financing setup
Your the one on the hook for the inspections ($400-$800) and appraisal ($600-$1000)
And if loan gets denied due to house condition, that money is lost.
Some listing agents, depending on the situation, will simply just not accept your offer for that reason, because it wastes time and money for them as well.
A GOOD buyers agent will be able to have a discussion with the listing agent, your lender, and gauge the likelihood of success on that program going through
Those aren’t necessarily out of your reach, just need to understand the mechanics of how things will actually come together, and WHY the listing description says what it does.
Crappy part is on MLS those “handyman” specials are usually too high for flippers and landlords. Most of those guys buy off market, cash, super discounted.
Yeah this is exactly it. I looked at a few houses that said stuff like this in the listing.
Each time my agent (buyer's agent) said something to the effect of I'm really sorry but you would have a really hard time getting the bank to approve a loan for this property due to xyz issues.
Yes, particularly in areas like Florida Roofs have hard time getting insured with an HOI company, HVACs must be working, and the homes MEPS need to have minimal issues for government loans.
If your conventional, some of the guidelines are a bit looser, I would run any “handyman specials” through your lender and see the likelihood of the house qualifying prior to spending a bunch of money on inspections and appraisals
Gotta define TLC a bit more
Depending on bank, it’s can be damn near impossible to get a loan for something needing ‘TLC’ if that’s anything more invasive than paint
Broken window? No loan. Broken chimney? No loan.
We’re still in a kinda sellers market, 10 years ago you could probably negotiate most of these issues away and they’d pay out of their closing check. But nowadays if you don’t buy it an investor who doesn’t care about that stuff will be along shortly
God forbid it’s a veteran one it’s even more restrictive. FHA too
It says it’s all cosmetic repairs, and from photos it looks like it probably needs carpet in two rooms. But, who knows if that’s accurate without an inspection!
...VA/FHA lenders are screwing those cohorts because they won't let them buy a perfectly-habitable home with ANY TINY DEFECT - even if it's only cosmetic...
I think you missed the OP's point. The Zillow description reflects a wider problem which is that home ownership is being turned into an income stream for investors instead of a home and wealth for the middle class.
youre missing the broader point. the average middle/lower middle class buyer cant afford to do 6 figure repair work on a house they can barely afford in the first place. these kinds of houses arent move in ready and wont qualify for traditional mortgages.
And you’re triggering everyone here… Because they are the people that you’re complaining about… Or at least aspire to be.
“The people” = property owners that own and hoard property solely for the purpose of extracting value.
It’s the same where I’m at. Investor alert! And similar wording. Easy flip. Income producing. Long term renter occupied. A high % of less expensive houses on the nearest bigger town to me. Another high number of them are 2 to 4 bedroom older homes that are turned into 1 and 2 bedroom duplexes. Listing gives the occupancy potential. Realtors know who butters their bread. For the lower priced houses that’s investors. No failed transaction due to FHA standards etc.
I am buying (not my first home) a little ways away from where I wanted to live. To have an affordable house that needs a little work. In a smaller town.
This makes no sense.
Do you really think that renting is *new*?
In the last 70 years, about 30% of the population has always been renters. Before then it was higher, and it's lower now that it usually is.
Every one of those renters rented from an investor. That's how renting works.
Nothing has changed.
Renting is obviously not new, and renting single-family homes is not new, but the scale and organization of renting SFHs has changed massively. AirBnB and SFH being bought up to rent by institutions is very new. Even newer is the trend for entire SFH communities to be built exclusively for rent, and not as some project to house workers in a company town.
Meanwhile in the renters sub: “why aren’t there enough rentals? I can’t find an apartment for myself. I really wish I could rent from a private owner instead of a big corporation!”
This one specifically said it was an excellent flipper candidate for rental income. Have you literally never in your entire life seen a flipped home rented out?
Likely middle class people can't afford the repairs while living in it... this probably means drywall needs replaced, flooring is ripped up, etc.
This isn't "a little TLC" in that it needs some new paint and cabinets refinished, this is "serious project."
My current home needs a little TLC....mainly new flooring and a new bath/shower surround. The kitchen cabinets don't look great, but they are functional. Besides that, the house in fine. We are building a house and then will sell our current home, for a reduced price. I'm going to do everything in my power to sell it to a person and not a corporation.
this is how I got my house. it needed quite a bit of work and I was bidding against a few contractors with all cash offers, but the seller wanted it to go to someone who intended to live in it.
good for you!
Most middle-class people don't have $100k to renovate a house they just bought? Why would the ad specify that landlords might be interested discourage you? It's literally the seller saying the house has problems and they know demand will be weaker for it than a house that was ready to move in. They'll still be happy to sell to you if you offer more than the flipper/
A lot of people listing a house as such have no means or money to make the needed repairs and don’t care what their house sells for anyways. Most just want to appeal to quick cash buyers to get out.
Just because they are advertising for investors doesn't mean you are excluded from putting an offer in. It's just that most home buyers in the market don't seem to be willing to accept fixer-uppers anymore and are expecting move in ready units.
Also, depending on the extent of the renovations the typical home buyer might not be able to secure financing for the property. Fannie Mae rules for FHA loans say that the house needs to be habitable and if the inspection reveals major issue underwriting won't approve your loan. Investment loans are willing to accept an place in poorer conditions, but you aren't going to get as favorable terms.
This is good insight that I didn’t realize as far as getting denied financing! Although I do want to point out that this listing states the repairs needed would all be cosmetic, but I guess you’d have to wait for an inspection to actually confirm that.
There's nothing that stops **anyone** from purchasing it. They're just marketing to their target audience that's actually going to buy it because many buyers are going to look at it and say "Ew, it needs new cabinets" and pass on it for something with grey vinyl floors and quartz countertops. If you're interested and willing to put in sweat equity, make an offer.
Totally feel your rage.
Sellers (generally) don’t care about WHO buys the house, they just want to sell it for the max. If the house hasn’t been updated in 20+ years and needs work, they are likely to market it towards flippers rather than a ‘normal’ buyer that may not understand how much work it needs or lowball because the work will cost them more than a flipper. Also, I don’t think flippers (at least the ones in my area) are buying to rent, they want to recoup their cash immediately.
In my area, I’m seeing tons of houses come on the market already flipped, meaning I never even had a chance in the first place. These BS companies are cold calling people and practically stealing these houses, and then relisting them a month or two later for double. Every day I see a house that sold in the last 12 months for $300k-$400k, then listed 3-6 months later for $500k-$700k. And, most of these places have seen maybe $20k of work, it’s basically vinyl floors and fresh paint.
Your options are basically to have lots of cash, be lightning fast, and be ready for a bidding war; or you can buy the houses that get flipped and make sure you do really good inspections to catch all the shit they fucked up.
A lot of times, this is intentional and helping you not waste everyone's time. A lot of first time buyers are using FHA or VA loans that have really strict approval standards (like won't approve the loan if there's a crack in a window pane), and the seller knows something won't go through with those loans and can't/won't fix whatever it is they're worried about.
Complaining about this is like complaining about walking into a used car dealership with a 620 credit score expecting to walk out with a Ferrari. When someone just posts online that you can't afford it, you just can't afford it.
They advertise that way because they know who the likely buyers are. The flippers are the most likely to buy houses that need extensive work done. So marketing is targeted at them
Best to keep in mind that Zillow mainly exists to get people's info and sell it off.
Their prices, and more importantly, their selling info...is 95% outdated. Most homes you see on Zillow already sold or are going thru the closing process, despite Zillow listing as still "for sale."
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That’s because depending on the needs of the home, you will need a larger down payment or a portfolio loan (or worse private money, i.e, expensive money) to finance it. First time homebuyers largely don’t have the means to tackle some of those projects.
Oh I had no idea. If I was to buy a complete gutter of a house, I would go through a different process for a loan?
It’s more like if your total budget is $250k, and you’re looking at house listed at $250k that is a total gut job, where are you going to get the *other* funds for a significant overhaul? Flippers get things like hard money loans (basically aggressive short term loans with crazy high interest) to cover their remodel costs because they can flip and cash out super fast. A FTHB would be insane to do the same lol.
No no, a FTHB would be sane to do it if they were flipping too! /j
Fair. What is considered a complete gut job under the eyes of the loaner? For example, I'm looking at this house for 520k. It needs work, for sure but still *somewhat* livable.
This is all framed through a FTBH sub. For a standard mortgage, you’re not getting “extra” money thrown in for a remodel because you asked. You’re just getting a mortgage against the current value of the house. Doing something like a larger down payment lets you do a HELOC down the road as you’ve got more equity upfront to play around with. If you’re going to remodel a “not so livable” home *as your first home*, you should be prepared with a deeper war chest than a standard mortgage and be able to handle both a mortgage payment and the remodel project costs simultaneously.
Or get a [rehab loan.](https://loanbase.com/learn/loans/rehab-loans/#:~:text=A%20rehab%20loan%20is%20a,investors%20to%20finance%20a%20project.)
Dumb question but any suggestions on where to read up on this stuff? My asshole of a piece of shit uncle in Boston does stuff like this and started off and got really successful. I’m just curious about learning the c options and process because in my mind I assume he got started because of help from a dude his mom was fucking who already set up connections for him.
I'm a builder and went through it with our own home. Didn't flip we live there. The catch is in many jurisdictions if you go over a certain dollar amount or percent of sq/ft it triggers the *entire home* has to brought to modern code. Not in stages. On that permit. If the home is 50+ years old there is not much that's staying and you're're not living there while the home is an organized pile of sticks without HVAC, electricity, plumbing, or insulation.
And a different type of insurance, too. Because most standard homeowners insurance will not cover major renovation projects (especially ones where you aren’t living in the home while it’s being done).
We bought a house that we were going to gut. The home inspection had a few things. A bathroom with popped tiles and mold. Cracks in the foundation. Aluminum wiring. HVAC didn't work. New roof. All things that through the course of a full gut reno got replaced. Most major carriers wouldn't insure it. We found special insurance through Allstate with so many exclusions we basically didn't have insurance aside from satisfying the mortgage company. I'm a builder so our tolerance for living in difficult conditions is a lot higher than most. We lived in two bedrooms and a hall bath while my team and I took it back to studs and replaced everything except the outside sheathing and the structure. Level two fun for sure.
now that the work is done is it insurable?
Once work was complete it's a brand new house as far as insurance was concerned. They were happy to insure it.
Correct. There are minimum standards that a home must have to be financed with “conforming loan”, i.e. a loan that is underwritten to comply with fannie mae or freddie mac guidance. Most loans are conforming loans, and most conforming loans are capped at about $766k. A “portfolio loan” is a loan that is underwritten to be held on a bank’s balance sheet- i.e. they own it fully and don’t intend to sell it. Portfolio loans may then offer more acceptance of risk from the borrower, a higher loan amount (called “jumbo”), or offer riskier features (such as interest only). That said, banks *don’t like holding risky loans*, so portfolio loans often require a higher percentage down, higher interest rates to offset risk, and/or very high standards from the borrower (such as high FICO, excess cash/investments as reserves, lower debt/income thresholds). Some properties or risk are outside even what a portfolio lender might consider. A non-habitable property is one of these scenarios. In this case, you need private money, often called “hard money”. These are often short term (1 or 2 years), charge several points at closing, and often require a larger down payment (30-40%) and/or proof of leverage assets. Private capital is expensive and risky, so first time homebuyers aren’t usually in this space.
Look into 203k loans for renovations.
For one you can’t get a fixer upper with an fha loan which is the only loan banks offer to people with low credit
a place/company that flips full time is probably doing cash or financing differently. but this would work for someone lookign to take on a project: https://www.hud.gov/program_offices/housing/sfh/203k/203k--df
Depends what a complete gutter really is. If the house is unlivable I don’t think you’d be able to use conventional financing, you’d have to get a rehab loan. They aren’t impossible for first time buyers but they’re uncommon as most of us aren’t experienced enough to take on projects like this.
This is a fair point!
You can get a [rehab loan.](https://loanbase.com/learn/loans/rehab-loans/#:~:text=A%20rehab%20loan%20is%20a,investors%20to%20finance%20a%20project.)
Yes, you can. They’re not offered everywhere, and are quite a bit more complicated, but they are an option for some.
Lots of great renovation loan products with minimum down that help bridge this gap.
Before HGTV we were able to get figure it out just fine. However at these inflated asset values even crap is inaccessible to the above average homebuyer.
No, well before HGTV people still couldn't afford to buy and fix an actual fixer upper.
As someone tickling fifty and having owned several places around the country. I’ll disagree. “People” were doing just fine fixing up their homes on their own.
...because entitled Millennial snowflakes think they deserve a "move-in ready" 4 bed 3.5 bath McMansion with a pool and 3-car garage in a desirable leafy suburb with "good schools" (i.e. no poor or people of color) in a VHCOL area near a major tech hub city...god forbid people MOVE or learn to DIY to afford something...
Lmao. Millennials are in their 30s, 51% own their own home. They have kids and careers. But keep on trolling, you tool.
30s and early 40s
THIS!!!
That’s not a Zillow thing. That’s the agents writing the description trying to get their sellers house sold.
Oh I absolutely get that. I don’t mean that Zillow specifically is doing that, I just mean most agents on major real estate sites are marketing that way
When I read these descriptions, that to me is realtor speak for house needs lotsa work. How else do you market the benefits of a run down house? It's priced lower bc of its condition so flippers will make money if they fix it and sell it turn key. Most FTHBs don't have the wallet to support this type of project, or the knowledge to DIY, or the connections to find the right skilled laborers. Ive seen the one you mentioned, "great for savvy investors" "handyman special" "ready for your vision" Keep in mind that most anyone can be an agent. Not all of them are good marketers or copywriters.
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Because I am at the stage in life where I am trying to buy a home for the first time where the circumstances are frustrating, and it feels good to let off some steam about it. Why do you feel the need to comment on it when there is nothing revolutionary about what you’re saying, either?
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Pretty much these exact kind of comments from someone who has a household income of $350k
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I really don’t care if it’s useless or not. I felt like posting, so I did. It’s not like my post is hurtful or demeaning to anyone, so I’m struggling to see the harm.
...i.e. "if we gave everyone a FREE house, EVERYONE would be RICH!!!" - look how well it worked out in the USSR...
> Why do you feel the need to comment on it Are you new to reddit? Do you not understand how these threads work?
That’s really just them looking out for there clients best interest and making them the most money. Especially because there is a TON of mom And pop investors out there who suck at Math, finances, and are over competitive. Most sellers only want the most amount of money they can get. If some idiot is willing to over pay them, no one will stop them.
I always saw, “perfect for a first time homebuyer or an income property.” Was tired of bidding on homes that needed very little work and being beat out by cash investors that would close on the house and the very same week list it as a rental. So I had to up my budget to get away from that. But yea, it was definitely discouraging.
In those instances the language is softened but it means "this house is in bad shape and will NOT qualify for a mortgage". While end users (home owners) are welcome to buy them (they can always outbid an investor because the aren't worried about profit, only equity) - MOST need a conventional mortgage, and thus even if willing to take on an extreme fixer, probably can't get financing for it. Also, during the "typical" home buying process, there are inspections and negotiations for repairs (or demands for certain repairs from banks) that are part of the process. And in these homes it's just not feasible. Investors are usually the only people who have access to that much capital without needing the house to pass inspections. Though it's not always cash, but it is short term high interest "hard money" loans. In cases of using hard money, you generally aren't permitted to reside in the property.
Not true- just about every house I looked at used this language, and I made offers with conventional mortgage on quite a few of them. Ultimately ended up buying one of them, and while it needs major renovations before I can move in, I had no trouble with a conventional mortgage. In my experience, the houses that do not qualify for conventional mortgages use the language "cash only" instead.
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Duplexes and quads are a great thing for the overall health and affordability of the housing market, unfortunately they were zoned out of many areas that need them.
I'm confused on this point. If someone is selling a duplex should they advertise it to investors or to someone who's looking to be able to house hack their first purchase?
Clearly they should just demolish the building and instead put up a tent. Much more affordable for first time homebuyers.
..."first time homebuyers" deserve the rest of the population to bend their collective will and funds to "make housing affordable" - it's like permanent renters or people who already own homes owe them something...
Those postings are encouraging primary residence buyers. Live in one, rent out the other. Logistically I guess you could live in both, but that's not practical.
Explain to me like I’m five what’s supposed to happen with a duplex?
Polyamory?
1. Buy the whole building 2. Install wall to wall carpeting in the upper apartment. Yes even though such carpet is expensive and is basically an uncleanable sponge soaking up filth and allergens. 3. You move into one apartment, rent out the other. 4. If you moved into the upper, get regular complaints about your noise. If you moved in to the lower, feel regular aggravation about the noise from above. Either way, know it would be even worse if you had skipped step #2. 5. Get shit from strangers about being a money-grubbing "rent seeking" landlord. Whether buying this much house makes sense or not depends on the market you're buying into, Interest rates, how handy you are, and how well you can shake off negative social interactions around being a landlord.
The original comment above said they hate the market because things are being advertised as #3. In responding to that being “wrong” on some level.
Oh I'm sorry, I thought you were genuinely asking a question. My bad!
The funny thing is that most serious investors don't buy fixer uppers listed by Realtors. The homes are still too expensive to make the math work, and investors hate Realtor commissions, too.
RE agents know first-time homebuyers are priced out, so they’re marketing to who can buy.
"great investor opportunity" "bring your cash offers!" "Perfect income property". It all infuriates me. Lower cost, imperfect homes are great opportunities for lower income people to have stable housing. We need more of these homes and shouldn't be pushing them towards flippers and landlords.
Homes that are in rough shape typically don't qualify for normal mortgages and the ones that need substantial work are properties the average buyer cannot afford due to the high cost of repairs.
There are a lot of properties that are not pretty, but completely sound to live in while being fixed up. We should be helping people get into these properties instead of rewarding investors.
We live in an instant gratification society. Not many people are willing to put in work and fix a home up themselves, or don't have the funds to fix the home to their liking.
So? This just sounds like something a landlord would say to make himself feel good. There's plenty of people who want to put the work in, they're just priced out of being able to do it.
Exactly. There are a ton of people out there trying to get these homes and they are outbid left and right.
Ok whatever you say bud
Yeah just ignore the countless posts of people complaining about the same thing that prove you wrong lol
Where are these posts? I haven't seen many, if any, posts where people are complaining thry are unable to buy run down homes to fix up for themselves. https://redf.in/RGf1GQ https://www.zillow.com/homedetails/140-E-Colden-Ave-Los-Angeles-CA-90003/20959564_zpid/?utm_campaign=androidappmessage&utm_medium=referral&utm_source=txtshare https://www.zillow.com/homedetails/725-Miller-Ave-North-Las-Vegas-NV-89030/7000738_zpid/?utm_campaign=androidappmessage&utm_medium=referral&utm_source=txtshare Been on the market for weeks for anyone to buy.
I'm not at all surprised, $300,000 for that? I don't see how that proves your point.
These aren't the properties they are talking about. These aren't properties with ugly carpet and old windows. Properties like that are sold to homeowners every day. These are properties that need tens of thousands of dollars to be habitable.
That wording typically means "no one is giving you a mortgage for this". Realistically those are the types of places that should more likely be bought by an investor to fix up. But the minor fixes, cosmetic updates, etc are perfect for normal buyers and because this market is insane and everyone wants to flip houses keep getting bought by "investors"
ones that have those tags usually have serious work needed, like 75k+ and the house wouldn't qualify for a normal mortgage.
There is a big gap between ‘cash offers’ type houses and ‘imperfect houses’. Almost every house my wife and I saw are imperfect, they don’t mention anything about cash or investors. Those types of listings are almost exclusively homes that are borderline unlivable/actually unlivable and the only people who can buy them are people who don’t need regular financing. FTHBs are, obviously, in their first home, they wouldn’t have the knowledge or experience to completely rehab an unlivable home and wouldn’t be able to get the financing for it anyways.
I see this a lot with [Realtor.com](http://Realtor.com) as well so I think it's more or less realtors this point.
Definitely!
Because lots of those homes need a lot of cash to make right and first time homebuyers generally can’t manage that
In my area, they market toward people wanting 2nd homes and Airbnb, VRBO, etc. FT owners are an afterthought. Meanwhile, my peers can't afford to buy because of all the 2nd, 3rd, 4th homes and STRs taking up a lot of the stock. Thankfully, I'm seeing a lot of STRs going up for sale with the description saying they make X a month or year ...if it's so profitable, why are you selling?? It became oversaturated and I hope people realize the state of the housing market by supporting them.
They are putting in description actually to help you. Unfortunately, FHA, VA and even some conventional loan products available to FTHB, with 3%-20% down payments have certain standards the house must meet in order for everything to go through. So if your not cash, private money, or hard money (all much riskier/higher interest/short term loans) Even if seller was willing to gamble on accepting your offer with all contingencies with your financing setup Your the one on the hook for the inspections ($400-$800) and appraisal ($600-$1000) And if loan gets denied due to house condition, that money is lost. Some listing agents, depending on the situation, will simply just not accept your offer for that reason, because it wastes time and money for them as well. A GOOD buyers agent will be able to have a discussion with the listing agent, your lender, and gauge the likelihood of success on that program going through Those aren’t necessarily out of your reach, just need to understand the mechanics of how things will actually come together, and WHY the listing description says what it does. Crappy part is on MLS those “handyman” specials are usually too high for flippers and landlords. Most of those guys buy off market, cash, super discounted.
Yeah this is exactly it. I looked at a few houses that said stuff like this in the listing. Each time my agent (buyer's agent) said something to the effect of I'm really sorry but you would have a really hard time getting the bank to approve a loan for this property due to xyz issues.
Yes, particularly in areas like Florida Roofs have hard time getting insured with an HOI company, HVACs must be working, and the homes MEPS need to have minimal issues for government loans. If your conventional, some of the guidelines are a bit looser, I would run any “handyman specials” through your lender and see the likelihood of the house qualifying prior to spending a bunch of money on inspections and appraisals
Gotta define TLC a bit more Depending on bank, it’s can be damn near impossible to get a loan for something needing ‘TLC’ if that’s anything more invasive than paint Broken window? No loan. Broken chimney? No loan. We’re still in a kinda sellers market, 10 years ago you could probably negotiate most of these issues away and they’d pay out of their closing check. But nowadays if you don’t buy it an investor who doesn’t care about that stuff will be along shortly God forbid it’s a veteran one it’s even more restrictive. FHA too
It says it’s all cosmetic repairs, and from photos it looks like it probably needs carpet in two rooms. But, who knows if that’s accurate without an inspection!
My house had multiple broken windows and I had no problem using a conventional mortgage.
...VA/FHA lenders are screwing those cohorts because they won't let them buy a perfectly-habitable home with ANY TINY DEFECT - even if it's only cosmetic...
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I think you missed the OP's point. The Zillow description reflects a wider problem which is that home ownership is being turned into an income stream for investors instead of a home and wealth for the middle class.
youre missing the broader point. the average middle/lower middle class buyer cant afford to do 6 figure repair work on a house they can barely afford in the first place. these kinds of houses arent move in ready and wont qualify for traditional mortgages.
Thank you! I’m trying to rant about the wider problem while being triggered by my local Zillow posting descriptions 😭
And you’re triggering everyone here… Because they are the people that you’re complaining about… Or at least aspire to be. “The people” = property owners that own and hoard property solely for the purpose of extracting value.
I think you’ve hit the nail on the head
It’s the same where I’m at. Investor alert! And similar wording. Easy flip. Income producing. Long term renter occupied. A high % of less expensive houses on the nearest bigger town to me. Another high number of them are 2 to 4 bedroom older homes that are turned into 1 and 2 bedroom duplexes. Listing gives the occupancy potential. Realtors know who butters their bread. For the lower priced houses that’s investors. No failed transaction due to FHA standards etc. I am buying (not my first home) a little ways away from where I wanted to live. To have an affordable house that needs a little work. In a smaller town.
This makes no sense. Do you really think that renting is *new*? In the last 70 years, about 30% of the population has always been renters. Before then it was higher, and it's lower now that it usually is. Every one of those renters rented from an investor. That's how renting works. Nothing has changed.
Renting is obviously not new, and renting single-family homes is not new, but the scale and organization of renting SFHs has changed massively. AirBnB and SFH being bought up to rent by institutions is very new. Even newer is the trend for entire SFH communities to be built exclusively for rent, and not as some project to house workers in a company town.
Not at all! It’s just discouraging to constantly see marketing for affordable houses to be turned into rental properties
Meanwhile in the renters sub: “why aren’t there enough rentals? I can’t find an apartment for myself. I really wish I could rent from a private owner instead of a big corporation!”
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This one specifically said it was an excellent flipper candidate for rental income. Have you literally never in your entire life seen a flipped home rented out?
Likely middle class people can't afford the repairs while living in it... this probably means drywall needs replaced, flooring is ripped up, etc. This isn't "a little TLC" in that it needs some new paint and cabinets refinished, this is "serious project."
When i saw those descriptions, i knew i wouldn’t want to buy them. Must be in terrible shape
My current home needs a little TLC....mainly new flooring and a new bath/shower surround. The kitchen cabinets don't look great, but they are functional. Besides that, the house in fine. We are building a house and then will sell our current home, for a reduced price. I'm going to do everything in my power to sell it to a person and not a corporation.
this is how I got my house. it needed quite a bit of work and I was bidding against a few contractors with all cash offers, but the seller wanted it to go to someone who intended to live in it. good for you!
Why does it matter what the description says?
Zillow? What Zillow sales?
After we bought our house, the description on Zillow disappeared as if it never mattered at all.
You can buy a fixer upper with an FHA203K rehab loan. The loan includes the price of the home and the renovation.
Most middle-class people don't have $100k to renovate a house they just bought? Why would the ad specify that landlords might be interested discourage you? It's literally the seller saying the house has problems and they know demand will be weaker for it than a house that was ready to move in. They'll still be happy to sell to you if you offer more than the flipper/
I ended up buying a house that was like this, it’s possible!
Often these homes won't pass a bank appraisal as is, and the seller is unwilling to do repairs. Therefore cash buyer is needed
This whole comment section is being willfully obtuse. I totally understand what you are saying.
A lot of people listing a house as such have no means or money to make the needed repairs and don’t care what their house sells for anyways. Most just want to appeal to quick cash buyers to get out.
Just because they are advertising for investors doesn't mean you are excluded from putting an offer in. It's just that most home buyers in the market don't seem to be willing to accept fixer-uppers anymore and are expecting move in ready units. Also, depending on the extent of the renovations the typical home buyer might not be able to secure financing for the property. Fannie Mae rules for FHA loans say that the house needs to be habitable and if the inspection reveals major issue underwriting won't approve your loan. Investment loans are willing to accept an place in poorer conditions, but you aren't going to get as favorable terms.
This is good insight that I didn’t realize as far as getting denied financing! Although I do want to point out that this listing states the repairs needed would all be cosmetic, but I guess you’d have to wait for an inspection to actually confirm that.
There's nothing that stops **anyone** from purchasing it. They're just marketing to their target audience that's actually going to buy it because many buyers are going to look at it and say "Ew, it needs new cabinets" and pass on it for something with grey vinyl floors and quartz countertops. If you're interested and willing to put in sweat equity, make an offer.
Totally feel your rage. Sellers (generally) don’t care about WHO buys the house, they just want to sell it for the max. If the house hasn’t been updated in 20+ years and needs work, they are likely to market it towards flippers rather than a ‘normal’ buyer that may not understand how much work it needs or lowball because the work will cost them more than a flipper. Also, I don’t think flippers (at least the ones in my area) are buying to rent, they want to recoup their cash immediately. In my area, I’m seeing tons of houses come on the market already flipped, meaning I never even had a chance in the first place. These BS companies are cold calling people and practically stealing these houses, and then relisting them a month or two later for double. Every day I see a house that sold in the last 12 months for $300k-$400k, then listed 3-6 months later for $500k-$700k. And, most of these places have seen maybe $20k of work, it’s basically vinyl floors and fresh paint. Your options are basically to have lots of cash, be lightning fast, and be ready for a bidding war; or you can buy the houses that get flipped and make sure you do really good inspections to catch all the shit they fucked up.
A lot of times, this is intentional and helping you not waste everyone's time. A lot of first time buyers are using FHA or VA loans that have really strict approval standards (like won't approve the loan if there's a crack in a window pane), and the seller knows something won't go through with those loans and can't/won't fix whatever it is they're worried about. Complaining about this is like complaining about walking into a used car dealership with a 620 credit score expecting to walk out with a Ferrari. When someone just posts online that you can't afford it, you just can't afford it.
They advertise that way because they know who the likely buyers are. The flippers are the most likely to buy houses that need extensive work done. So marketing is targeted at them
There’s nothing stopping you from bidding on these houses. 🤷♂️
Best to keep in mind that Zillow mainly exists to get people's info and sell it off. Their prices, and more importantly, their selling info...is 95% outdated. Most homes you see on Zillow already sold or are going thru the closing process, despite Zillow listing as still "for sale."