Strategic first home purchase
Question for seasoned investors.
So here is the situation I will be making my first home purchase sometime soon. And I have a plan that I am going to purchase my first home (My Personal) and I am trying to buy it so when I move in I have at least 20k equity and I can force at least 20k after purchase. My question really is does anyone have any advice on what cash on return rehabs I should look for so I can make sure I meet my goal or any general advice going this route in general.
@Scott Blevins, This is a hypothetical response due to me not knowing the amount of money you are working with or the real estate market you are shopping in. So you're saying you want to buy a home that has an ARV worth 100k, and of that 100k you want to have 20k in equity and 20k in sweat equity. You will have to have funds to support that sweat equity (which I assume you're aware of), and that means you are looking for a property that is well below market value, and that you can add significant value once you make the appropriate changes. So you're looking for a home that is priced at 55k that is worth 75k (20k equity) that you can add 5k (75+5=80K) for rehab to acquire an ARV of 100k (or any other number of ways). By no means is this going to be an easy task, but very feasible, as I have done it several times to add properties to my portfolio.
I recommend you look for homes that are the crappiest house on the nicest block. Obviously this is going to be a location that you can stomach to live, but they are out there. The type of rehab can be anywhere from interior to exterior issues. The home must be livable for a bank to loan you money, and ideally where the market is moving in the right direction (up). You can find these properties on the MLS (which will be few, however they're there), but most likely you will have to find them through auctions, driving for dollars, and/or a wholesaler, etc. I hope this helps, and if you want more specific's just let me know. Good luck!
Yes you are correct about having the funds for the sweat equity. I am really am trying to do this to acquire a Heloc as soon as possible as I do have a future partner but I would like to have some skin in the game. Thank you for the info and yes your correct I will be going with a conventional loan and I have the disadvantage of family to think of so it obviously could be a complete disaster for the loan obviously but also because of family. I'm looking in the York Pa market and have around the 200 range to work with. The most challenging aspect so far is finding the correct agent which I believe I have just done
