Hello every one, thanks in advance for your insight. I have plans to buy my first home, but i dont want to just do it the traditional way, I would like to be able to buy something with as much discount as possible and be able to do some rehab, get immediate equity and live in it for a few years and then resell. I have also read quite a bit on how to Identify potential preforclosure houses on the county's website (or equivalent) listings, If I were to have about 20% down for a 250K home, and a bit more for rehab, would this be the best way to go about this? Or would you recommend going the forclosure/HUD route?...or any other advise is welcomed( Charlotte NC) Thank you!!!
What you want to do is what my husband and I have been doing for the past 12 years, we have been doing it this way which is the way it has worked for us:
Our first home was a traditional sale FHA the house was outdated it needed a lot of work in kitchen and bathrooms plus carpet, we lived there for a few years mean while we were fixing it little by little with money out of our pockets the home cost us $117k we sold it for $220k, with that money we bought a piece of land (more like a lot) for $35k and built a house on it for $60k sold that one for $120k, we were fortunate to sale the house when price of homes here in AZ were really low we were able to by 2 houses with 120K but they were foreclosures and one needed a lot of work the other one also need some work but not as much so we lived in that one till we finished fixing both up the one that needed a lot of work (ugly one) cost us $40k and we put $20K into it we rent that one out now for $900 per month we are holding it for a few years to avoid paying a lot of taxes, the house has recently been appraised for $136K we have had the house for 2 years.
The other house cost us $60K and only had to put $10k into it (we just put new roof, fixed rv gate and painted house inside and out) we sold it about a year ago and sold for $138K, we recently jumped to our next home which we live in it now we got it a year ago for $157K it was a short sale we just painted and fixed the pool and now it has been appraised for $225K. But we plan to sell this one in another year or so again to avoid high taxes but mean while we have been remodeling the house with money out of our pockets, we get our money back anyways so we don't mind doing a little bit at a time to the house almost everyday.
It has been a lot of hard work, a lot of sacrifice, a lot a lot of patience plus putting fun and having nice cars, nice clothing a lot of stuff people have aside to be able to have what we have now, but its all worth it because the best part is they have all been paid off in cash so we have no mortgages plus we get rental income coming in, but we are not stopping there we hope to continue to reach our goal which is having at least 10 rental properties and build our custom home by the time we are 55-60 years old we are now 37. And all paid off! it is possible when you set your mind to it. I wish you good luck and good fortune.
@Paul Gomez the best way is going to be a market specific answer, so hopefully someone from your area can chime in?
In my market, for a first time home buyer, I would recommend taking advantage of some of the "owner occupant first" buying opportunities that exist. In my market, there are some really good deals on REOs for owner occupants. You can find lots of those properties that need only minor rehab in my market. That's what I would recommend if those are available in your market.
Those owner occupant first programs are offered buy HUD, Fannie Mae, and some of the big banks too like Wells Fargo.
If you have the funds for a large down payment and you want to do more investing, I would only put down as much as I have to, to avoid any kind of PMI, MIP or whatever else they are calling any kind of mortgage insurance. FHA mortgage insurance is very expensive and it is for the life of the loan, unlike the way it used to go away once you get below 80% LTV.
First, there are a lot of great loan/mortgage programs for FTHBs. Get with a great, local mortgage person and get pre-qualified. Even before that, get with a good Realtor in your area who likes to work with buyers. Find one that is successful, but not too busy. And they can probably refer you to a great loan officer or mortgage broker for FTHBs. Then, do like you said and get a great deal on a HUD or REO. After that, take out a HELOC on the equity and you now have money to invest with. That's basically how I got started except that it was my 4th home. And I still live in it, and I'm still investing with the HELOC over 10 years later.
Thank you very much for the insight!... I apologize for the late response. I had to stop my plans buy I am now back in the market.
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