Is this a good strategy to buy a house I cannot afford?
Hello everyone,
I was recently offered a job in Cambridge MA - my wife is adamant we live in a nice home in a good school district. The problem is meeting those criteria in an area like Cambridge (if you do not want a long commute) means you are looking at 500-700k houses at a minimum. Here is what I want to do. All numbers are pulled out of thin air - please let me know if I am being unrealistic!
Find a dilapidated cat-pee smelling home with a gutted kitchen (just as an example) that is listed for around 200k. Home should be so bad that banks are not offering traditional financing.
Finance 300k from a hard money lender (or other private lender) to purchase the home and have 100k for repairs. Getting the money may cost about 60k (20%) upfront, which I have.
Repair the home and do a cash-out refinance. I am eligible for a VA home loan with 0% down so I can pull out the full value. Hopefully it would appraise over 500k. I do not think I can afford a 500k mortgage so although it would be nice to cash-out the full amount and put it towards my next investment I think I might have to refinance just the 300k + lender fees + misc costs to have an affordable mortgage.
I am fairly new to all this but my readings on the forums have led me to believe this can work. Any thoughts?