Battered Home Becomes a Beauty Using the FHA 203k Renovation Loan, Part I

This is the journey of how one battered home became a beauty using the FHA 203k Renovation Loan.

Let me give you a little background. My client, an absolutely delightful woman who will be retiring in one year wanted to purchase a small, single story home that she could afford on her retirement income and was reasonably close to her grandchildren. We viewed homes for over 7 months, made 5 offers and were out-bid by cash buyers each time. It was time for a change in strategy - purchase a battered home and make it a beauty using the FHA Renovation Loan.

It's true that this program is time and paperwork intensive and not for the faint of heart, but wait until you see the results!

This is where we started....an 890 s.f., 2 bedroom, bank-owned home that had three positive attributes: structurally sound with dual pane windows and original hardwood floors. The list of problems was much longer:

• the roof and gutters were at the end of their useful life
• the insulation was so old that it had turned to dust (it was literally vacuumed out of the attic)
• an overgrown Palm tree was acting as a rodent bridge to the attic
• the electrical was original, outdated, insufficient for current needs and had been spliced and repaired so poorly that it was a hazard
• the hot water heater was broken
• the downspouts were draining to the foundation
• there was no sewer cleanout
• the exterior of the home hadn't been sealed or painted in years
• the closet in the small bedroom had been turned into a 2nd bathroom and a psuedo-closet had been constructed (another poor DIY project of a previous homeowner)

The kitchen had a slew of issues:

• Very small and out-dated with a narrow door from the dining area
• One ceiling light fixture
• One electric outlet (hm, do you plug in the microwave, the coffee maker or the toaster?)
• the exhaust over the stove was a hole in the ceiling with an old-school fan
• original, chipped, yellow formica counters
• One piece of good news - the cupboards were in decent shape!

The home has a large back yard that is adjacent to Open Space but the only access to the yard was through the garage.

The retaining wall (the fence is on top of it) was starting to lean.

We visited the home several times, made our list of repairs and anticipated costs and added 20% for potential issues we couldn't see (and thank goodness we did!). My client took a leap of faith that this battered home could become a beauty and submitted an offer to the bank. Our offer was declined.

I told my client, "Don't worry, an investor won't buy this house because it requires too much work. We'll let the bank sit on it for awhile." Two months later, we submitted our offer again and this time it was accepted.

Part II - photos of the renovation in progress, Exterior

Part III - The Kitchen renovation

If you want to create your dream home using the FHA 203k Renovation loan in Contra Costa county, California, I can guide you through the process.