So as a newbie, I want to get started with a property that I'm familiar with. Here's the basics of the deal. Traverse City, MI. Great location close to downtown and Grand Traverse Bay. 700 sq ft, 2 bed 1 bath. Sitting on a slab. Fenced in backyard. Last sold in 2005 for $102,000. Built in 1955. Freshly remodeled interior in 2012, but will probably need a little TLC on the cedar shake siding soon. Maybe an electrical update. Sits on a 7,000 sq ft lot. Zestimate puts it at $117K but I would probably offer in the $105K area.
I have been renting this house for one year and have been sub-leasing the other room. I just signed the least on May 15th for another year. So I have a year to prepare for this deal. My landlord hinted last year that she wanted to sell in another year or so. I pay $735 a month for rent plus I take care of all the utilities. My roommate pays $525 flat rate. I don't mind having a roommate but as my business is expanding I need a home office. I could easily rent this place out for $950 a month with a little bit of work. Rent is crazy high in price and demand in Traverse City.
My finaces: I work as an outside sales rep for a window and door company. I just started in February with a $30K per year salary plus expense account and commissions. (I'll probably make $40K this year, and add $5K-$10K per year after that.) I don't have very good credit due to poor choices when I was younger. About 600 FICO. I know that I'll have to wait a little while to be able to get traditional financing.
I was thinking I could do an owner occupy deal and live there for another 1-2 years (1 year to finish my lease then present my landlord with my proposal, if she accepts, live there for another year to fulfill owner-occupy terms, and be at my job long enough to get traditional financing.)
Sorry this is so long, I'm still new so I wasn't sure what information was pertinent or not. If I missed anything let me know, I just need guidance on how to proceed.
All I can say is you will need to up your credit to 640 FICO to qualify for a loan. Look into FHA financing in which you will need 3% down of the purchase price. If you are a veteran look into VA financing in which no down payment is required. You can ask the home owner to pay the closing costs to save you some money.
I have a rental in TC and would agree with you that the market is nuts up there! My note for you would be to take a much harder look at comps than simply through Zillow. I've seen values off 30% or more.
Where's your place in TC?
@Courtney Sorrell without access to MLS how would a person be able to get a better look at the comps?
just wondering sorry newbie here lol.
For this situation with a SFR that doesn't need much work, I'd just keep an eye on what's selling in my neighborhood. I'm a newbie too and find it harder to locate comps for multis. I usually look at the property cash flow vs all expenses and debt service to determine deals.
My place sits on a triangle between 8th Street and Munson Ave (Front St.) It's an awesome location. The house next door to me just sold for $160K last year. But that place has significantly more square footage and a separate living space in back to rent out (plus it's nicer and newer in general.) I've been looking at the comps pretty closely and based on my profiling of the landlord, I think $105K is reasonable. The plan is to buy and hold for a few years then flip it in a summer. Move on to the next.
Does anyone have any tips on rock solid strategies to boosting your credit over the course of a year?
@Courtney Sorrell Thank you so much for answering my question.
@Trevor Mitchell best of luck! That is a great spot near the school!