How to Evaluate a Fixer-Upper: Comps, Rehab Financing, and Carrying Costs

Thinking about buying a fixer-upper to build instant sweat equity? 🛠️ A "cheap" property can quickly turn into a financial pitfall if you don't run the math upfront. Before putting in an offer, here is the 4-step evaluation checklist we broke down on today's podcast episode: 1️⃣ Check the Comps (Realtor Check): Look at sales data for both renovated and "as-is" fixer-uppers in the neighborhood. You need to know your post-renovation ceiling and who your target resale buyer is. 2️⃣ Verify Loan Eligibility (Lender Check): Broken windows, missing appliances, peeling paint, or leaky roofs can instantly disqualify a home for traditional financing. You may need a specialized rehab loan—like an FHA 203(k)—which comes with different rules, terms, and requirements. 3️⃣ Prioritize Scope & Build a Buffer: List what must be fixed to make the home safely livable vs. what is purely cosmetic. Once you have an estimate, add 20%—unexpected costs will happen. 4️⃣ Factor in Carrying Costs & Occupancy Rules: Most lenders (and insurance policies) require owner-occupancy within a set window (typically 60 days). If you can't move in right away, can you afford to pay a mortgage AND rent somewhere else while work is being done? Meghan Shigo, Realtor Century 21 Affiliated DRE 01243803 #meghanshigo #meghanshomes #realtor #anaheimrealtor #anaheimrealestate #realestate #anaheim #orangecounty #homebuying #homeselling