Sweat Equity Saves the Day
In today's housing market, buying a foreclosure can mean big savings at closing -- or a massive headache waiting to happen. But for avid DIYers Valerie Stow and her husband, Jason, meeting the challenge was half the fun.
They proved that, with a little elbow grease and creativity, even the tightest housing jams can be fixed.
The Stows bought their first home in 2001, a three-bedroom, one-bath ranch-style house in Grand Junction, Colo. It was exactly what the couple needed at the time, but at just over 1,000 square feet, they knew they'd eventually have to make room for their growing family.
So in late 2010, with both home prices and mortgage rates sinking to record lows, the couple decided to try their luck in the foreclosure market.
Generally speaking, foreclosures are approximately 20 percent cheaper than conventionally listed homes, according to the National Association of Realtors. But the risks involved with buying an uninhabited home, as well as the complexities of the buying process, can make most homebuyers think twice. Valerie, though, was game.
"With foreclosures, you never know what you're going to get," she says. "But, overall, the house wasn't trashed, and, being the DIYers that my husband and I are, we knew that we could fix it...."
The couple found a three-bedroom, two-bath home with vaulted ceilings and plenty of space to start a family. And with a little sweat equity, they were ready and willing to transform the house to fit their vision.
There was just one problem -- their real equity was tied up in their still-unsold first home. After an unproductive winter on the market, the house had only attracted one low-ball offer that Valerie and her husband were unwilling to accept. If they couldn't sell before moving into their new home, they'd be forced to pay on two separate mortgages. It left them with a difficult decision to make: Accept the low-ball offer or rent out the home until another buyer could be found. So they made what they saw as the best of a bad situation.
"Being landlords was something that we didn't want to get into, but we had no choice," she says. "Sometimes you have a plan and life has a different idea for you. You just have to adapt...."
With a tenant in their old house, the couple could at least stop worrying about their double-mortgage dilemma. It was an imperfect solution, but becoming landlords allowed them to focus once again on their new home. And while most of their equity was still tied up in their first home, the industrious duo found ways to fix up their home on a budget.
"Bringing out our DIY hats, we just got right on small little projects that we could either do for free or for little money," like painting and landscaping, she says. But even after the setbacks, Valerie and Jason are still optimistic about the future.
"Even though things don't go as planned, Jason and I are still really happy we made the move," she says. And best of all, the couple is about to undertake their biggest project to date -- parenthood.
"All and all, things are working out like they should, and we couldn't be happier."