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Today, a commercial construction project manager shares how he and his wife took out a “risky” loan to buy a fixer-upper just outside Asheville, North Carolina.
The basics
Age: 31
Pronouns: He/him
Household setup: Married
Occupation: Commercial construction
What was your home experience when you were growing up?
My wife and I both grew up in families who owned homes. She comes from a family of DIY-ers, and you don’t really DIY unless you own. Together, we had always planned on buying after we got married.
Why did you start thinking about buying?
When we moved to Asheville, North Carolina, we started renting. I quickly realized I hated our rental. It didn’t have a garage or enough space for our hobbies. Between relying on street parking and some safety concerns about our neighborhood, we decided to start looking sooner than planned.
How long did you look before finding your home?
Just two months.
Did you have any non-negotiables?
We needed at least three bedrooms and two bathrooms. I wanted a garage with storage space, and my wife hoped for a walkable neighborhood no more than 20 minutes from downtown Asheville. All of that and a fixer-upper where we could create value.
How many homes did you see in person?
We saw 20 with our Realtor® Michael Hunter. We were his first clients, so he was always ready at the drop of a hat to show us anything we were interested in.
Did you make any previous offers?
Five. One of the homes had a lot of DIY renovations that had been done poorly and needed to be redone. We made another offer on a home the first week it was listed. We offered over the asking price, but then the seller panicked and pulled the house off the market.
How did you know this was the one?
At first, we didn’t even want to see it. It was just outside the geographic range we had set on our search, and the listing photos were atrocious. The only good news was that the owner had invested a lot of money into fixing foundation problems, so that was taken care of.
What offer did you make?
We offered $495,000. The home was originally listed at $560,000. It was at $535,000 when we saw it and had been under contract twice. Our Realtor also knew that this home was owned by a trust. The parents had passed, and the children seemed tired of dealing with the property. They accepted our offer within hours.
How did you come up with that number?
We evaluated the condition of the house and gathered estimates for repairs, knowing that we would do as much work as possible on our own to build sweat equity in the home. We also considered how long we wanted to keep the house and how much it could sell for.
The other homes on the street are valued at $700,000, so we’re estimating that in five years, this house—with all the renovations we’ve done and will do—will sell for at least $650,000. That’s a conservative estimate. So, let’s say we spend $50,000 on materials and work, then we’ll make $105,000 in “sweat equity.”
Where did the down payment come from?
We had been saving for years in a high-yield savings account, but we were also fortunate to have some family assistance.
Tell us about the loan you took out.
We took a chance on a seven-year, adjustable-rate mortgage. It’s a traditional loan that starts with a lower, fixed interest rate, but then, at seven years, switches to an adjustable interest rate. We are hedging a bet that within 84 months, either the interest rate dips below what it was when we purchased it, or we’ll sell the house, which is likely, given that we want to start a family. With this kind of loan, you get a lower interest rate by accepting a higher risk.
Did this loan make you nervous?
Absolutely, but I had sound logic for doing this. Still, I called my dad and my wife’s dad and asked if we were crazy. The more we all talked, the more it made sense.
What work have you done on the house so far?
As we’re really committed to doing everything ourselves, we’ve only spent $20,000 to date. We removed the wood paneling and drywalled the walls to make the space brighter; we pulled out all the carpets and put in new flooring; and we removed the chimney and gave up one of the hall closets—the house originally had five—to create a master suite with a walk-in closet. With the new master bath, we paid someone to install the shower tile, but we put in the walls and waterproofed it ourselves.
What’s your best advice for someone buying a fixer-upper?
Anyone can do this. People are much more capable than they think. With a little confidence, you can build a lot of equity.
What do you love most about your home?
We got a lot more space than we expected. I have a huge shop in the basement. We have a lot of privacy, but we’re in a tightly knit neighborhood. After Hurricane Helene, for example, everyone really banded together, sharing resources and helping one another.
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