Want to buy and renovate GMA's house with little money down. How?

[Jack Plantin]

My grandmother is putting her home on the market, very desirable neighborhood and a rapidly growing & family friendly city within 1 hour of Minneapolis (Rochester, MN). I've been reading about BRRRR and am thinking that her property might be a perfect place to start, due to many young families looking to rent SFHs in this city.

Some details on the home:

- It hasn't been renovated since the 1970's, but it is relatively good shape.

- It's located next to a great middle school and within 15 minutes of a major hospital where many residents of this city work. 

- Comparable homes go for around 200k (rough rough estimate).

My wife and I have 20k saved up, have very good credit scores and would be first-time home buyers. Our questions are: 

1. What kind of strategies could we take advantage of to buy her home, while utilizing our savings mostly for renovations? I have heard of "under-contract" in this podcast, but don't quite understand how it gives you an advantage compared to conventional loans.

2. Would we be approved for a conventional loan, FHA, or other first-time buyer programs if the house is relatively old and requires updates?

3. Is there anyway to ensure my Grandma and we both get a good value in this deal?

I'm sure I have way more questions, but I think this is a good start. I'm in contact with a great realtor/investor in the area that can potentially help us find similar properties if GMA's doesn't pan out.

Thanks in advance for any input!

[Will Barnard]

Well, you can ask Grandma if she would carry the note and owner finance the deal for you. Then you do the purchase and sales agreement plus loan docs and security instrument through title and escrow. Maybe she is willing to give an interest rate comparable or less than what you could get at a bank. Maker sure you have Grandma's attorney draft the loan docs and deed of trust (or mortgage if a mortgage state).

You can certainly get a conventional loan on a home that may be outdated but so long as it has a functional and working kitchen and functional heater, and no other major issues like foundation problems, asbestos, lead, etc, then you have a home that can be financed.