How can I buy a house

14 Replies

Hello, I am looking for some advice on buying a new house and I know this is the best place to get one.  I make close to 5k a month.  I have 100K debt in the form of school loans.  My saving is around 6K.  I am looking to live in one or use it for investing.  Me and my parents share the house right now.  Both of my parents work as well and make 6k a month combined.  We are paying the mortgage on the current house as we are upside down on it.  Mortgage is very small though, close $1650 a month.  My parents filed the bankruptcy 4 years ago.  So can you guys help me with some options?

Because your cash position is small at this point, I suggest you start out wholesaling.  You can do that without cash and in the process you will learn your market and learn what a good deal looks like.  As your cash position grows, you can then begin buying for yourself while you continue wholesaling.  There are resources on this site that will help you learn how to get started.

Mike

Medium sure dark blue   dark grayMike Hartzog, SureMark Capital Group

Well, one of the things working against you is that student loan.  The debt service on that loan is pretty large I'd imagine, and will be counted in the ratios they use to qualify people for loans.  However, the loan for your parents place won't show up unless your name is on the mortgage which is nice because whatever portion you pay on it now won't be counted as part of your debt service.  Judging by the fact that they are upside down and previously filed for bankruptcy, I'd start seeing if I could qualify on my own for a house of my own.  However, if you intend to still help them out by paying part then you'll want to make sure you can afford your contribution, plus all existing debt service, in addition to the payments on whatever new house you find.

I recommend you find a lender nearby, perhaps a community bank, and start trying to form a relationship.  Be upfront, tell them your position and ask what you would need to do to get to where you want to be.  They can quickly tell you how much you're able to prequalify for based on income and debt, and then you know what range to look for.  Buy, live in, move out, rent, rinse, repeat.

Medium 57814a 906733c79c9941ca93b889a2b1296837 mv2William Murrell, Murrell Properties | 910‑777‑7175 | http://www.murrellproperties.com

I think you should pay your school loans off before you decide to invest or buy.

Joe Gore

a few wholesale deals and you can have that loan down or lease halfway. 

I wouldn't totally eschew real estate investing entirely to focus on paying off that debt.  I think a better route is somewhere in the middle, where you're trying to aggressively get out of student debt but at the same time investing.  Maybe you would just be focusing on the lower end of the price range.  If it takes you, say, ten years to pay off that loan, whatever investment you (safely) make now will probably have grown into something nice by that time.  That certainly takes diligence and sacrifice, but most things worth doing do.

Medium 57814a 906733c79c9941ca93b889a2b1296837 mv2William Murrell, Murrell Properties | 910‑777‑7175 | http://www.murrellproperties.com

I would get a little more cash together before you start- its nice to have a cushion when things go wrong.

Thank you every one for the response.  I really appreciate your guy's input.   @William Murrell, I completely understand your point.  I recently got married, and the house we are living in is proving  out to be bit congested with all of us living there.  So I don't want to go out and rent and lose money, so that is why I am thinking of a strategy where I could get a house, rent out couple of rooms or close to that so at least we wont be congested and at the same time it will be an investment.  That is what I am here for, a wide array of options that I can chose from in order to accomplish this.  

We bought our first house as a primary. It was a foreclosure and we redid it. When we moved we rented it out. My husband is active duty military so this allowed us to get started with limited downpayment. I know many people that buy their first house when they are young and rent rooms out. That is a great way to get started. As you save up money from having help with the mortgage and more pay raises you can buy rentals. If you buy a good rental as personal. When life requires you to move you can rent it instead of selling it when you buy your next house. Yes this is a slower way to invest. I personally think real estate is like the tortoise versus the rabbit. Slow and steady investments win the race.

Or buy a small MF so you dont have to share space. Plus it is a lot easier to find CF friendly MF than SFH where you would want to live IMO.

Originally posted by @Faiz Khan:

Thank you every one for the response.  I really appreciate your guy's input.   @William Murrell, I completely understand your point.  I recently got married, and the house we are living in is proving  out to be bit congested with all of us living there.  So I don't want to go out and rent and lose money, so that is why I am thinking of a strategy where I could get a house, rent out couple of rooms or close to that so at least we wont be congested and at the same time it will be an investment.  That is what I am here for, a wide array of options that I can chose from in order to accomplish this.  

 With student debt if I remember correctly you can apply for a forbearance or deferment (for 3-6 months) and that won't count against your debt-to-income ratio, but I could be wrong. Laws may have changed in the last few years. You might want to consider a Fannie Mae Homepath property or an FHA203k that would allow a lower downpayment and some renovation costs. I would also check with credit unions, they sometimes can help you when banks can't and sometimes they have alternative loan programs that can help you get into a place.

HUD has programs available for little to nothing down. Id probably start by finding an area within an hours drive where the costs of houses are much lower. Also, dont lock yourself in to a specific strategy. If you find something inexpensive, look at it on its own. Is it a rental? Is it a flip? Is it a duplex that you can move into one side and rent the other out to make your payment? By being open-minded and agressive you can get real estate to clean up your financial position for you. 5k is pretty solid monthly cashflow to work with.

(479) 739‑8438

Every one approaches financial planning differently. Your age, goals, family size and location play a larger significance than your debt. That's a constant that won't change but over time and that is only IF you refinance it.

With that being said, your income and savings is sufficient for a number of strategies. A local REALTOR that you trust and is knowledgable should be of great help.

The monthly payment to buy is usually cheaper than the payment to rent. Especially when you are already familiar with the upkeep an owner has to deal with. Getting your family in a home that you can afford WHILE you eliminate your debt and learn about investing would be the best option. Especially in a cheap city like Philly.

I think much of the previous advice was assuming you wanted to but strictly for investment.

Good luck.

@Faiz Khan   My two cents: 

#1 start researching your area for what houses are selling for. Go to open houses with your wife (listen to her as she talks about how she would paint and decorate them!) Pay attention to the details of the finishes etc.

In your free time or commuting time listen to audio books about real estate such as Rich Dad, Poor Dad and I am sure others can tell you their favorite.

#2 Now about money. You are getting closer with 6k! It looks like in your area houses are selling at $160,000+ and you need at min. enough to cover closing costs.

You can learn about creative financing, seller financing, FHA, 203 (k) loan (which lets you repair a home and purchase in one loan), all here on Bigger Pockets.

I really thought the advice to start wholesaling to earn more money for either paying down your student loan or adding to your own home fund is a great idea!

Happy house looking!

You could always simply market to or find someone willing to sell you his/her house with seller financing. They usually will not ask for all the credit questions that a mortgage lender asks.

I side with you, I too have so much college debt but in the end their are always more than one way to skin a cat.

Great luck from the east coast.

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