OfflineHi guys and gals
My wife and I are shopping for a house and were wondering if we should buy something move in ready or should we try to find a foreclosure? We're going FHA and don't mind doing work if we'll make more and have equity. We have a goal to stay in this house for 8 years, expand our business and then buy our dream home(mini mansion). We found a place today that we love, great neighborhood, schools and a great house but we'd be buying it at fmv.
I would love to hear your opinion on if we should take this place or hold off and try to find a foreclosure. Thanks in advance for the input everyone.
__________________
Let's have some feedback DGers
If you can find a foreclosure or a fixer-upper that you like, I'd say go that route. Otherwise, go with the house you love. 8 years is a long, long time to live in a house that doesn't fit your personality or lifestyle
Those who kill time murder opportunity.
"Beloved, I wish above all things that thou mayest prosper and be in health, even as thy soul prospers." III John 2
"To get up each morning with the Resolve To Be Happy is to set our own conditions to the events of the day. To do this is to condition circumstances instead of being conditioned by them." Ralph Waldo Emerson
Mortgage companies usually balk at financing a house that still needs work. Some insurance companies act the same way. Foreclosures are notorious for needing substantial work. FHA is also notorious for refusing to finance houses that aren't "move-in ready." I've heard if a house needs paint, carpet, or any type of roof or wall repair, they won't fund it. I know, it seems like you can't win, right?
If it's instant equity and a great return in 8 years you're looking for, consider a FSBO that needs work. If you work out a lease option with the seller, you can rid him of a property he's had a hard time selling, without the cost of a RE agent. You can still get in at foreclosure prices if you find the right place with a motivated seller. You can repair and re-fi after 2-3 years, pulling cash out that won't be taxed because it's mortgage money.
As long as you live in the place at least 2 years in a row, you'll miss the capital gains tax whack on any profit you make. After 2-3 more years, prepare to sell the place for just under top dollar the same way you bought it. This gives whoever you sell it to 2-4 years to build up a little equity for themselves and then cash you out. If you need to close quicker, you'll still have plenty of time to list it with an agent and sell that way.
The key thing is to make sure the numbers justify the deal. If this house is just a stepping stone for you, make sure you can make at least 20% profit when you buy, and then at least another 20% profit when you sell. Don't fall in love with the house, fall in love with the deal. Do all your due diligence and math, let the math make your decision, and DON'T change the numbers to try to make the math agree with you. It's either a good deal or it isn't. Best of luck to you...
Paul: "I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when my fear is gone I will turn and face fear's path, and only I will remain."
Duke Leto: "I'll miss the sea, but a person needs new experiences. They jar something deep inside, allowing him to grow. Without change something sleeps inside us, and seldom awakens. The sleeper must awaken." - "Dune."
Keep in mind great deals that can be bought BELOW FMV do not have to be foreclosures. IF you are looking for your dream home now then you will have emotions involved, if not, then my advise is to look at as a business deal. Make an offer that would be fair but yet give you that instant equity. To me it makes no difference if the house is "move in ready" or in need of TLC.
Its got to be all about the numbers. It doesn.t matter what type of houe it is if the numbers work.
Randy
www.adeptpropertiesllc.com