“I am seeing more first time buyers become interested in the subject of rehabbing a property right from the beginning,” says Farella, who also writes a blog on the rehab subject: Rehab Dollars & Sense
. “They are finding an affordable location that has a great lot or that’s in a highly-rated school district, and they are seeing properties that are older and need updating. So, they are becoming more open to the idea of renovating, even as first time buyers. That is something I have not seen in the past but that has been trending in recent months.”
Across the board, Farella has recently seen an influx of first time homebuyers turn to renovation loans, such as Fannie Mae’s HomeStyle loan or the FHA
’s 203K loan – something that they may not have imagined as an option in the past. “They are seeing that they can get more for their money, and get into a better living space that is more customized to what their tastes may be or that is more up-to-date.”
Two-unit dwellings are also becoming increasing popular in the renovation space; especially among new homebuyers in the Chicago market, mentions Farella. “Buyers can purchase a two-unit dwelling, renovate it, and then rent out the other half they don’t live in to help pay their mortgage. In the end, the property ends up being worth more than what they put in it, even with combining the purchase price and rehab dollars because it is generating significant revenue that they can use,” he says.
Serving as a great investment opportunity and revenue source, duplexes or two-unit home are becoming increasing prevalent in the renovation market as more people dip into the untapped opportunities. “There really are a lot of possibilities out there for homeowners and new homebuyers when utilizing renovation loans,” he says.
“Renovation lending is hot and getting hotter”
“Renovation loans allow more people to buy homes”
Balancing all the factors associated with home buying, such as location, features, school district and more can be tricky. But according to Perry Farella, loan officer with AmeriFirst Home Mortgage, first time homebuyers are now “working backwards” by seeking properties not for their aesthetics, but rather ones that are within the parameters of their preferred locations that need updating, and then, renovating to fit their needs.