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Opinions on fix-up costs
Hello! My fiance and I just put an offer down on a lovely little shortsale. Everything was moving along swimingly -- the seller immediately took it off the market, and any other offers would be relegated to secondary offers. Despite being a shortsale, the house seemed to be in phenomenal shape. We were right, the house is great -- but the detached garage and driveway are not. The POS inspection is requiring a new driveway (ripped out to the base) and a new roof on the garage. We were not unrealistic, I don't think: we had money set aside to fix the other, more obvious, housing issues (broken front porch, new garage siding), and a bit set aside for emergencies.
A few questions:
The amount of money we'd put into the house, purchase price and repairs, might be more than the house could sell for in the next five years. Is that a bad idea? And how easy is it to get small, 10k, home repair loans using the house itself as collateral? We would own the house outright.The stress is on now, because we only have another day to decide whether to walk or not, so any tips would be greatly appreciated.
A note: Brand new driveways are INSANELY expensive! Who knew? Just had to share the shock there 
One asphalt quote at 40'x9' was for 12k, in the Cleveland area.
Re: Opinions on fix-up costs
I would not spend my time and money going through a short sale on a house that is going to be worth less than you are putting into it. I would personally look for another house.
I have no experience with home repair loans but have heard through the forums that they are extremely hard to get right now.
If you are paying for your home in full at closing. You would qualify for a home equity loan .
We put in a new concrete driveway in our home 5 years ago - I feel your pain.
Right now, it is not recommended to sell your home prior to 7-10 years as it takes that long to have the home appreciate enough just to cover buying and selling costs. Check with your realtor as to the situation in your location.
The bolded comment is concerning. Are you planning to resell this home in five years? If you are not planning on being in a home long-term these days, it is not wise to buy a home at all.
Resale is tough and while we have seen upticks in some housing markets, foreclosures are still pouring in and the market will probably become more depressed, which means that resale of a home in the short-term will be bloody.
Only buy if you plan on being there for a long time. Whatever you put into a home now with the idea of selling to break even or make a profit in the next 5 fives is a pipe dream.
That "POS" inspection just saved you a TON of money. Walk away and find another house. That's the point of inspections.....to find the stuff that will cost you money before it's too late.
That house is most definitely NOT in phenomenal shape. It sounds like you are a little attached to this house and not looking at it objectively. The inspection actually just helped you quite a bit because now instead of thinking 'Hey, we'll get a new driveway when we get to it" you have a pricetag and know that it will be sooner rather than later.
Look, our house had fairly minor flaws when we purchased it two years ago. In those two years we've put almost $20k into new roof, windows, burst pipe, etc. I would not count on getting a loan without it costing you an arm and a leg. We were in the same boat of having looked at a number of houses that needed immediate repairs that we didn't have money for, and our mortgage officer gave us the cold truth that odds are quite against a young couple getting an additional loan when they just got the mortgage.
It really sounds like you should move on. Those are just the things you know about, so keep in mind what you'll do if you have other emergency repairs that you then have no money for, on top of being out however many thousands for a loan.