Trying to Buy My First Home

[Imagebuffet]

I have been in pursuit of my first home for about 2 years. It took me months to find a lending agency that would return my calls. I've been looking at homes since about last March or April. I've even signed a contract on a house or two, only to terminate the contract due to structural defects found on inspection. Usually, though, about the time I find a house, so do the investors, and they buy it out from under me (they pay cash).

Now, I'm looking at two homes. One home is 1300 s.f. for $105k. It has a 0.15 acre yard and a storage shed in back. It looks in good shape. It had a foundation repair from the previous owner, but no warranty on that repair.

The other house is for sale by owner. He is an old man who apparently hasn't done more to advertise his offer than the sign in his front yard. Per county tax records, he has a 1500 s.f. home with a 1/4-acre yard in the middle of the city. He wants $79k for it. He says he has lived in the home for 20 years, his children are grown and his wife died 2 years ago, so now he just wants to leave. I can tell he is desperate to sell; maybe too desperate. Anyway, his roof is old and will need to be replaced and his foundation has settled, producing a gap in one window.

I'm a single, 42 year-old man with no dependents. I am buying a house as an investment. I would like to build my own. But, I have to get a VA Loan, because I can't come up with a decent down-payment. Of course, I want to get the fixer-upper, even though I have no known handyman skills. Both my lender and my realtor advise strongly against pursuing that house. My common sense tells me that the old man would sell me a bomb if it would get him out from under it. But, it is hard to pass up a 1/4 acre lot in an ideal location for $79k.

Probably the best option is for me to continue looking for houses.

I hate this.

[Big T]

VA may not lend money on a house that is need of alot of repairs, if the old man wants to sell bad enough, but doesn't have money for reairs, you could get him to pay at closing from his proceeds from the sale, what I mean is, you could get estimates for roof and foundation, lets say it needs 5 piers for the foundation and the roof needs 2500.00
to repair, 5 piers maybe around 1500.--2000. + 2500. for roof repair, ask the title company to hold in escrow 4500.00 for the roof and foundation company to be paid to the repair companys after completion of repairs after closing, that way you don't have to take it out of your pocket and the old man doesn't have to pay it before closing, just my .2-- oh and get a licensed home inspector.

[toverman]

We bought a fixer upper for a song in a nice neighborhood and are still in the process of fixer-uppering it. Can be a long process depending on what needs attention. The bonus is you get to make it yours rather than inherit the good and bad taste of previous owners.

There are a couple of things that you can't (at least not without difficulty) change about a house: its age, its location and the size of the yard. If there is no standout among the two houses you are considering, I'd go for the bigger one because space is expensive to add. But only after a thorough inspection and you really kicking the tires. Budget for the things you know will need replacing right away, expect more things to happen in any house ... including a newly built one.

[David Whatley]

Richard, drop me a pm or call me, I can help you. I have bought over 100 properties over the past 25 years, and rehabbed nearly all of them.
David

[Tom]

If you can't afford the down payment, paying for the rehabbing may be really difficult. It will cost more than you think it does. Especially if you don't really have any rehabbing abilities.

[venchka]

There is no such thing as buying a home for an investent. Ask the folks who got the real estate market where it is today. They thought they could get in and out in a hurry with big bucks. Wrong.

Buy a house to live in. If you walk away down the road with a few bucks, great. You'll need that money to buy the next house. So you never really have any real profit from buying and selling homes.

Good luck.

[The Philos]

We just bought our first house (we close in a week) and know how painful the process is, but I'd like to repeat what Wayne said. Buy it for you and not for appraisals.

[Bruce M. Morris]

Richard, if a VA Loan is an option for you, have you gone through the Veteran's Portal on Texasonline? Texas offers Veterans home improvement loans and building loans ontop of the of the VA loans. Something to check in to.

[CaptainTom]

Get with David Whatley. He's a straight shooter and will give you good advice.

[venchka]

Hey, that's great news. I wish I had known about all of that help when I moved to Texas after Katrina.

Be very conservative. Avoid the Money Pit situation where you loans on top of loans and you owe WAY more than your house is worth. It is very easy to overbuild in a neighborhood. Cadillacs in VW neighborhoods don't sell.

By all means buy a house. Just be very careful.

[Cajungaltx]

Okay - warning - if you are easily bruised by blunt statements - skip this post. I'm fairly... no, not fairly... I'm VERY opinionated about this issue.


Still here?

Okay...

Here it is:

BROKE PEOPLE SHOULD NOT BUY HOMES!!!

Read it again: BROKE PEOPLE SHOULD NOT BUY HOMES!!!

Pay off your debts first, and then save for a while - YES, it's hard... YES immediate gratification is SO much more fun.... but if you buy a house when your financial house is not in order.... that house is going to be a HUGE problem... rather than the culmination of the 'American Dream'... it'll turn into the 'American Nightmare'.

There are REASONS that a Real Estate Broker is called a BROKER... cause that's what you get if you aren't in a financial situation to BUY a home.

Foundation issues can be caused by plumbing leaks... soil issues... all KINDS of crap you don't want to take on if you can't come up with a few G's as a down payment...

And no handyman skills???? Oh boy... the learning curve isn't that sharp... but it CAN be painful if your broke...

I think this is a huge difference between a RICH person's mentality and a POOR person's mentality. We look at a house, like it's an 'asset'.

An asset is something that MAKES you money. If I lose my job tomorrow... the bank isn't going to pay ME to live in my house. That's not an asset.... and it's not an investment... it's a liability. Until it's paid for.

Get yourself $1K in savings for 'emergencies'.
Pay off your debts = ALL OF THEM!
Save 3 to 6 months living expenses.
Save for your downpayment - and don't do a 30 year loan... do a 15 - MAX... save yourself a few thousand dollars.

[venchka]

I vote for Donna to run the Treasury.

[crazeazn]

save up for a bigger downpayment/ fix it bills there will be PLENTY of homes flooding the market soon

[Imagebuffet]

Thank you all for your replies. I take this house-buying business very seriously.

I will be dropping David Whatley a PM some time today.

I'm not broke. I just don't have 25% of the value of a house in cash. That's nearly a year's pay for me. My credit score is better than most people's credit score; much better, nearly perfect.

I had 6 month's living expenses in savings last year, counting all my investments, and 3 month's living expenses in cash. Then, I tried to buy a house (and hired nude models and took a class at UTD and got into a timeshare contract that I had to break). At $500 per inspection on several houses, $200+ per nude model, $800 in un-reimbursed college expenses, $600 in emergency roadside assistance and $750 for breaking the timeshare contract, I soon ran out of cash. I wasn't broke until I started trying to buy a house in Texas. Really, it seems like everyone has a broke house that they are trying to sell at full market value. Every one of these houses needs a new foundation and roof, and the VA won't let me buy them.

I'm slowly rebuilding my savings. My only long-term debt is my car.

[Cajungaltx]

Originally Posted by venchka

I vote for Donna to run the Treasury.

I wish.

The dang thing would be on lock down for a LONG time... and that's all I'll say about that... so I don't get myself into political discussion arena trouble.