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Thread: Home Buying

  1. #1
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    Home Buying

    Anyone with experience in home buying have tips for first time buyers? Preferably in higher cost markets like LA, NY, SF, etc. which kind of changes the strategy.

    Looking for anything from recommended websites and books, to just random tips you learned.

    Going from NY to LA I accepted being a renter for the long term, but I'm getting tired of throwing money away and not having control of my property.

  2. #2
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    Avoid condos due to the HOA's

    Be able to put 20% down

    If you don't have experience, get financing and inspection contingencies

    Understand the neighborhood really well and where it's been recently and where it's going in the near term (new restaurants opening up? A lot of commercial vacancies?)

    Think about your commute to work, grocery store, etc. That adds up over time in a really big way.



    The problem is, housing is very person specific.


    Are you handy? Are you looking at this for a long term space to live, or as an investment, or a little of both? What about roomates/spouse/kids etc? Do you live alone and intend to keep it that way? Do you have intentions to get married, or are married? Will you be wherever you are going for 3+/5+ years?

    It's so specific per person and what you are looking for and need from a place. Basically, we need more information



    I do like how Century 21 has a map tool now that you can use to draw the boundary you want to look in, and then you can easily search properties within neighborhoods you want to be in. I personally use that when I buy (I own 34 houses and buy about 1 every quarter).

  3. #3
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    If possible put more than 20% down.
    I fully agree with Jeffy on everything.
    Condos are tough as are Coops.
    My additions to his thoughts would be that Trulia is solid from the perspective of gaining insight into neighborhoods.
    The big keys are kids or no kids? Do you want to use public school?
    How long do you want your commute? Yard or no yard?
    Unless you are loaded, there are tradeoffs.
    I would also highly, highly, highly, highly recommend a 2 family. It is so, so worth it. I will put it like this, my wife and I bought a 2 family house in park slope, broooklyn. She (I'm a starting out acupuncturist so I'm not the breadwinner) could afford the mortgage but we'd be living on ramen. Our tenants pay for 2/3rds of the mortgage. They have a 2 bedroom, beautiful apartment. We have 2 floors of beauty and a backyard. A two family gives you more space, more options and if you stay forever, an income when you pay off the mortgage.

    Also, be expected to fight like hell about everything. Finding a house is tremendous strain.
    Then be prepared to fight like hell. Because when you sign the papers, the terror ensues. lol
    It's worth it!!!
    Good luck




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  4. #4
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    Quote Originally Posted by Kinkotheclown View Post
    If possible put more than 20% down.
    I fully agree with Jeffy on everything.
    Condos are tough as are Coops.
    My additions to his thoughts would be that Trulia is solid from the perspective of gaining insight into neighborhoods.
    The big keys are kids or no kids? Do you want to use public school?
    How long do you want your commute? Yard or no yard?
    Unless you are loaded, there are tradeoffs.
    I would also highly, highly, highly, highly recommend a 2 family. It is so, so worth it. I will put it like this, my wife and I bought a 2 family house in park slope, broooklyn. She (I'm a starting out acupuncturist so I'm not the breadwinner) could afford the mortgage but we'd be living on ramen. Our tenants pay for 2/3rds of the mortgage. They have a 2 bedroom, beautiful apartment. We have 2 floors of beauty and a backyard. A two family gives you more space, more options and if you stay forever, an income when you pay off the mortgage.

    Also, be expected to fight like hell about everything. Finding a house is tremendous strain.
    Then be prepared to fight like hell. Because when you sign the papers, the terror ensues. lol
    It's worth it!!!
    Good luck
    I absolutely recommend this.

    When I got divorced, I moved into one of my duplexes that was coming up vacant. Then, when I moved from that town to St. Louis, my fiance and I bought a 3 unit, and live in the upstairs (old converted 4, 1 bedroom units) and rent out the two downstairs units.


    We are getting married in June, and have enough equity in the property now to do a cash out refinance and have the down payment for a nice family home this fall. The rent from the three unit will almost cover both mortgages. Annoying to live in an apartment for a few years, but while in your 30's, who cares? Both properties will be paid off in 20 years and we'll keep the income.

    I'm also a landlord any way, so I do this as my work. But even doing this privately for your first purchase, it can really create a lot of income and ease the burden of home ownership.

  5. #5
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    I understand putting 20% down, but trying to do that in a high cost market like he wants is not easy. Especially if he has kids. I mean who has 70k laying around.

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  6. #6
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    Quote Originally Posted by carter80 View Post
    I understand putting 20% down, but trying to do that in a high cost market like he wants is not easy. Especially if he has kids. I mean who has 70k laying around.

    Sent from my SM-N950U using Tapatalk
    70k as in 20% down on a $350,000 house? That won't get you much of anything in the markets OP is referring to.

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  7. #7
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    Quote Originally Posted by spliff(TONE) View Post
    70k as in 20% down on a $350,000 house? That won't get you much of anything in the markets OP is referring to.
    Your right. I'm trying to come up with 3.5% in my ****** market.

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  8. #8
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    Home Buying

    Quote Originally Posted by carter80 View Post
    I understand putting 20% down, but trying to do that in a high cost market like he wants is not easy. Especially if he has kids. I mean who has 70k laying around.

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    So...

    You donít have to put down 20%. As far as my experience goes you can put down less but you will pay mortgage insurance.

    Foreclosure and buying fixer-uppers?

    I bought my present home 5 years ago coming off the lowest point in my life ó 2 years on disability with a 550 FICO score. I was able to buy it in foreclosure with just $3500 down on an $87k loan. Mortgage insurance was added. The downside of foreclosure is that the home may often be in disrepair. Mine needed a lot of work. I used a LOT of caulk to keep the rain out for 4 years!!!

    Last year I was able to refinance using a renovation loan. I got my FICO score up over 800, the bank assessed the future value of the home at $150k after an estimate of $33k to repair the structure. So right now I owe $110k ($77k in principle + 33k to repair) on a home valued at $150k. I no longer pay mortgage insurance because my equity ($40k on paper) is over 20% of the value.

    Maybe something like this can work for you. Housing is dirt cheap in my area, but the strategy could be the same in higher markets.


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    Last edited by Dugmet; 03-13-2018 at 02:13 AM.
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  9. #9
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    Quote Originally Posted by Dugmet View Post
    So...

    You donít have to put down 20%. As far as my experience goes you can put down less but you will pay mortgage insurance.

    Foreclosure and buying fixer-uppers?

    I bought my present home 5 years ago coming off the lowest point in my life ó 2 years on disability with a 550 FICO score. I was able to buy it in foreclosure with just $3500 down on an $87k loan. Mortgage insurance was added. The downside of foreclosure is that the home may often be in disrepair. Mine needed a lot of work. I used a LOT of caulk to keep the rain out!!!

    Last year I was able to refinance using a renovation loan. I got my FICO score up over 800, the bank assessed the future value of the home at $150k after an estimate of $33k to repair the structure. So right now I owe $110k ($77k in principle + 33k to repair) on a home valued at $150k. I no longer pay mortgage insurance because my equity ($40k on paper) is over 20% of the value.

    Maybe something like this can work for you


    Sent from my iPhone using Tapatalk
    I'm going to use my V.A loan, I don't think they allow fixer uppers.

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  10. #10
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    Quote Originally Posted by Kinkotheclown View Post
    If possible put more than 20% down.
    I fully agree with Jeffy on everything.
    Condos are tough as are Coops.
    My additions to his thoughts would be that Trulia is solid from the perspective of gaining insight into neighborhoods.
    The big keys are kids or no kids? Do you want to use public school?
    How long do you want your commute? Yard or no yard?
    Unless you are loaded, there are tradeoffs.
    I would also highly, highly, highly, highly recommend a 2 family. It is so, so worth it. I will put it like this, my wife and I bought a 2 family house in park slope, broooklyn. She (I'm a starting out acupuncturist so I'm not the breadwinner) could afford the mortgage but we'd be living on ramen. Our tenants pay for 2/3rds of the mortgage. They have a 2 bedroom, beautiful apartment. We have 2 floors of beauty and a backyard. A two family gives you more space, more options and if you stay forever, an income when you pay off the mortgage.

    Also, be expected to fight like hell about everything. Finding a house is tremendous strain.
    Then be prepared to fight like hell. Because when you sign the papers, the terror ensues. lol
    It's worth it!!!
    Good luck
    You live in slopes? Jeez how can you afford that?

    Weíve lived in Kensington - the same apartment rent free for 20 years and my dad is the super. My grandfather had worked for my landlords grandfather and now my dad works for the original landlords granddaughter. Our landlord inherited the business and doesnít know much about real estate so she put the two buildings she owns on the open market for a whopping 45MM.

    Bad part is, since my dad is the super, we donít live on a lease, my dad essentially works, gets $700 a week and lives rent free. When the building is sold however, weíre unsure if the new owner will keep my dad as a super or hire a management team to take care of his job instead. We started looking for houses on Zillow (Iím hoping for the Marine Park area since itís ĎíĎcheapííí and in a nice neighborhood.) but we canít exactly look/buy until we know exactly what happens with my dad and his job...itís like a catch 22. I do however, want my parents to find a place (likely on a 30 year mortgage...we donít have a lot of money since my grandfather passed a few months ago and my mom had to go through chemotherapy) just so that in the event my dad does keep his job, we can rent it out for 10 years until my dad can collect retirement or so if we have to move on a whim, we wonít go crazy looking for something last minute. Either way, it would be ideal for my parents to somehow get past the first 10-15 years and I eventually take care of the rest.

    Iím glad somebody made this thread because we only found this out 2 weeks ago and weíve all been going crazy to a point where Iím house hunting and calling real estate agents more than Iím on PSD lol. Iím not exactly a 21 year old real estate expert but I HAVE to learn since my parents have very limited knowledge about this stuff considering they never had to mortgage anything (or pay rent for 25 years)

  11. #11
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    Quote Originally Posted by spliff(TONE) View Post
    70k as in 20% down on a $350,000 house? That won't get you much of anything in the markets OP is referring to.
    Yeah. You need a bare minimum of 100k and thatíll get you a house in E. NY or somewhere completely run down. 150k would be ideal for a nice house in a nice neighborhood although it likely wonít be much more than 1500 sq ft.

  12. #12
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    Quote Originally Posted by Jeffy25 View Post
    Avoid condos due to the HOA's

    Be able to put 20% down

    If you don't have experience, get financing and inspection contingencies

    Understand the neighborhood really well and where it's been recently and where it's going in the near term (new restaurants opening up? A lot of commercial vacancies?)

    Think about your commute to work, grocery store, etc. That adds up over time in a really big way.



    The problem is, housing is very person specific.


    Are you handy? Are you looking at this for a long term space to live, or as an investment, or a little of both? What about roomates/spouse/kids etc? Do you live alone and intend to keep it that way? Do you have intentions to get married, or are married? Will you be wherever you are going for 3+/5+ years?

    It's so specific per person and what you are looking for and need from a place. Basically, we need more information



    I do like how Century 21 has a map tool now that you can use to draw the boundary you want to look in, and then you can easily search properties within neighborhoods you want to be in. I personally use that when I buy (I own 34 houses and buy about 1 every quarter).
    Thanks. Yeah I know thereís a lot of variables, just looking for peoples experiences and ďif only I knew ______ back thenĒ stuff.

    The 20% rule to avoid PMI is key, but obviously a bigger impact here in LA where starter homes in decent neighborhoods are above $500k and thatís a property with improvement needs. Public transportation here sucks and thatís the trade off. Live in a nice area in South Bay and deal with a drive thatís over an hour. In NY you could be in a far off suburb, pay $300-400k for a decent home and only be a 30 min train or subway ride away.

    Looking for long term. Iím not ďhandyĒ, in an intuitive way, but I can, and have, pull off most work after some research.


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  13. #13
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    And yeah Iím not touching anything involving an HOA unless we get desperate to get in and go with a townhouse or something to pay it off sooner, but I doubt that.

    And to echo others, yes the market here is outrageous. To get what we need for a long term home in an area that doesnít kill me with a long commute, itís gonna be $600-800k to get in a good neighborhood for our kids.

    I donít want to get into finances, but I do well. I also put most of that to savings, retirement, kids savings, etc for the longer term goals, so Iíd be a couple years out on the down payment without digging into that savings (which I just wonít do).

    It may just have to be that I take on the PMI but with even 10% down it at least wouldnít last too long.

    Trulia is pretty solid. The challenge in places like LA or NYC is seeing the neighborhoods long term. When I left NY 12+ years ago, you couldnít beg someone to buy in Williamsburg or LI City and now itís exploding. Trying to spot an area thatís good enough for kids now and will build and increase our ROI on the home is key.

    I love the idea of a multifamily and renting out a unit or guest house...may have to revaluation off that idea.


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  14. #14
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    Quote Originally Posted by carter80 View Post
    I'm going to use my V.A loan, I don't think they allow fixer uppers
    I used my VA Loan so I didn't have to put 20% down. I couldn't imagine trying to find (or saving) that much money (for me to put 20% down would have been like $88,000).

  15. #15
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    Quote Originally Posted by GGGGG-Men View Post
    And yeah Iím not touching anything involving an HOA unless we get desperate to get in and go with a townhouse or something to pay it off sooner, but I doubt that.

    And to echo others, yes the market here is outrageous. To get what we need for a long term home in an area that doesnít kill me with a long commute, itís gonna be $600-800k to get in a good neighborhood for our kids.

    I donít want to get into finances, but I do well. I also put most of that to savings, retirement, kids savings, etc for the longer term goals, so Iíd be a couple years out on the down payment without digging into that savings (which I just wonít do).

    It may just have to be that I take on the PMI but with even 10% down it at least wouldnít last too long.

    Trulia is pretty solid. The challenge in places like LA or NYC is seeing the neighborhoods long term. When I left NY 12+ years ago, you couldnít beg someone to buy in Williamsburg or LI City and now itís exploding. Trying to spot an area thatís good enough for kids now and will build and increase our ROI on the home is key.

    I love the idea of a multifamily and renting out a unit or guest house...may have to revaluation off that idea.


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    If you can deal with the PMI for 2-3 years, and make principle based payments whenever you get bonuses for example. And try to raise the value of the home and live in a reasonable area, then that may be better than simply throwing rent away or trying to save for years.

    Take a look at some amortization schedules, or even consider a shorter term loan if you can afford a higher payment.

    For example.

    If you can put 10% down of a $500K house and borrow $450K over 30 years at 5% interest, payment before taxes and insurance is $2415.70. Add PMI of, say $350 per month. Puts you at $2800 per month before taxes and insurance.

    But if you can do the same thing, and deal with a 15 year mortgage (which usually nets you a better interest rate), say $450K borrowed at 15 years at 4.5% would make the payment $3442.47 before the PMI.

    That's basically $1000 per month for 3 years, or around $36K more to live there. That's better than saving $36K over those three years. But, it's more every month, and would be a problem if you lost an income for example.

    If you can afford to do that, instead of trying to save to get yourself to 20%, but instead of saving, you are basically just paying the bank more aggressively, the difference in your balance owed is swift.

    Assuming you got this mortgage today, you would owe $400K (80%) on the property in Sept of 2024 on the 30 year arm vs June of 2020 on the 15 year....for another $1000 per month.

    I don't know your financial situation, I'm just giving you an example. Instead of saving the money to get to the 20%, you could realistically use those savings to pay a shorter amortization period on the mortgage and then refinance whenever you have that equity.

    This assumes no change in value to the home of course....and there are a ton of other factors to consider.


    One of my closest friends lives in downtown Chicago, and they bought a $500K, 1 bedroom condo a few years ago. Then McDonalds and Google announced new headquarters across the street from them, and his last appraisal was for $900K. And he only put like 5% down. Now he has the equity to cash out, buy a new property and rent out the current condo.

    That was some luck, but he and his wife can easily afford the risk when they did it, and it was better than spending 4K a month in rent, even if a huge portion of the payment goes toward PMI and interest.







    As far as, I wish I knew......I can just tell you the things I avoid whenever I purchase properties.

    I don't mess with shotty roofs. They are a big expense that you don't really get the value back on. I need to know I have at least a decade left on the roof.

    I don't mess with major foundation issues, or what looks like it could become a foundation issue. I like to know the house is leveled and stable (I have hills around where I am, you probably don't though).

    I don't mind plumbing and electric, but I don't want houses with knob and tubing or the old galvanized plumbing. I'm fine with second generation electric and plumbing though. You can usually make them work until you need to replace them further down the line.

    Always check for termites and notice if the house or the neighbor have bait sticks out. That's a sign there has been termites recently. Also, check for their dust tracks and if the house has a basement, check the boards under the ceiling. Also, check for straight base boards under a house. If you buy anything too old, they tend to get warped and will create cracks in plaster/walls, etc as the house continues to settle.

    I don't care about replacing furnaces, but AC units are quite a bit more (at least around me). I can replace a furnace for about $1500, but the AC is usually around $4000. And that's with my guys doing it and not paying someone else. It can be expensive.

    I prefer houses with old kitchens and baths. I always replace them, it's not as expensive as people think to put in high end finishes and have someone lay tile. And it really raises the value and perception of the house. Just make certain the layout is there to provide the space to do it.

    Absolutely know the neighborhood. If you see a lot of for rent signs on commercial buildings, that's an awful sign in a city because of how people migrate around. Before you make an offer on anything, call the utility companies to get last 12 months usages so you have an idea what you'll be paying each month.

    Don't be afraid to low ball, but have a realtor who is comfortable doing that. You'll be surprised what you can get for cheap if a property has been sitting.

    Your market is likely different than mine, but I buy houses all the time where we are countering back and forth and I simply say 'final and best offer, that's all I'll pay' and it gets accepted. They are just trying to get what they can out of you. You only make money on housing whenever you buy it. It's a burden to sell. So never be afraid to walk away, don't get emotionally attached to a house you don't own yet.
    Last edited by Jeffy25; 03-13-2018 at 03:04 PM.

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