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Thread: Home Buying

  1. #16
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    Quote Originally Posted by valade16 View Post
    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).
    I've always had to put 20% down on residential, and 25% down on commercial.

    But, the first house I ever bought was during that $8K first time home buyer tax credit. I bought a house for $150K, wiped out my savings, but then used that cash back to help buy my first rental property.

    Of course, different market. That $150K was a 4 bed, 2 bath fixer upper in a nice neighborhood. About 2400 square feet.

    I realize that isn't really an option in major markets. But I bought a 3 bedroom house in St. Louis city's Italian district recently for $57K. It's a small shotgun house, but a full 3 bedroom. I put 14K into it, and it appraised for $107K. You CAN find housing that will work, even if it's double that. I could have lived in that house no problem, especially after the repairs.

    Did take me awhile to hunt for that house btw. But they pop up. Especially foreclosures and short sales.

    Today, I buy houses for cash, do the repairs, and then get 80% of the appraised value back, and just keep rolling my cash. I never lose my 20% down because I'm always raising the value of the house enough to get it back. And since I'm young, I keep them long term as rentals, creating cash each month on top of the investment. But, took me a long time to get that cash saved up (and good equity purchases).

  2. #17
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    I was able to get my house without 20% down and do not pay PMI. I paid a mortgage insurance premium of a few grand at closing and do not have to pay the couple hundred dollars now monthly for PMI. Highly recommend even asking about it to your lender.

    So closing was more expensive but I had the money from my previous home sale to cover it and not be paying 250ish monthly just on PMI. The amount of house I was able to afford went way up as long as I was able to cover the closing costs.

  3. #18
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    Quote Originally Posted by Jeffy25 View Post
    I've always had to put 20% down on residential, and 25% down on commercial.

    But, the first house I ever bought was during that $8K first time home buyer tax credit. I bought a house for $150K, wiped out my savings, but then used that cash back to help buy my first rental property.

    Of course, different market. That $150K was a 4 bed, 2 bath fixer upper in a nice neighborhood. About 2400 square feet.

    I realize that isn't really an option in major markets. But I bought a 3 bedroom house in St. Louis city's Italian district recently for $57K. It's a small shotgun house, but a full 3 bedroom. I put 14K into it, and it appraised for $107K. You CAN find housing that will work, even if it's double that. I could have lived in that house no problem, especially after the repairs.

    Did take me awhile to hunt for that house btw. But they pop up. Especially foreclosures and short sales.

    Today, I buy houses for cash, do the repairs, and then get 80% of the appraised value back, and just keep rolling my cash. I never lose my 20% down because I'm always raising the value of the house enough to get it back. And since I'm young, I keep them long term as rentals, creating cash each month on top of the investment. But, took me a long time to get that cash saved up (and good equity purchases).
    Yeah seems like way different markets, the price for houses in Seattle is insane. My wife's co-worker bought a house that was sold at auction as abandoned property with druggies living in it. It was total crap and it was in Seattle and sold for half a million and they simply did basic repairs to make it livable from it's destitute state and it went up to like worth over $700,000, and it's under 3,000 sq ft.

    I ended up buying about 45 mins south of Seattle and although the house is big (4,000 sq) ft, it was still insanely expense. Thinking of a property being $100,000 in Seattle all I can imagine are like trailer homes lol.

    But even if I were studious enough to find the great deal on a foreclosure, I don't have time to invest any sweat equity in the home to fix it up.

  4. #19
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    Don't necessarily worry about 20% down. My first home I bought 9 years ago I was able to put 15% down (luckily the market was down at the time). Then last year I was able to sell that condo for a very nice profit over what I paid initially. But with the market the way it is now, even with a ~$50k down payment I was nowhere near a 20% down payment (more like 6%) on my new house as the market around here is thru the roof. But if you do it right with your lender you can avoid paying points. And honestly having PMI isn't that big of a deal as it doesn't add much into your monthly mortgage payment. Plus you can cancel it after a couple years of aggressive re-payment.

    I just suggest being patient in your search... make sure it's a good fit for you. If you get outbid (and you will) then move on to the next... don't overpay to where you don't feel comfortable.

    Don't let HOA's completely scare you off of condo's but they can be a hindrance so do your homework on what those HOA dues get you. A good real estate agent is also key. Luckily i used a close family friend both times so i trusted her and she always was real with me. There are also programs that will pay first few months of HOA for first time buyers.

    But as many have pointed out there are a lot of factors to consider. Just be patient and do your homework. Look into FHA loans or other possible deals out there that can save you money on closing costs. And also don't be afraid to negotiate the sellers paying some of the closing costs.

    Have a little fun and good luck.
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  5. #20
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    Quote Originally Posted by Jeffy25 View Post
    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.
    Well put, thanks for this. This is literally all the random thoughts I had flying around my head, but it helps to see it laid out like this.




    Quote Originally Posted by Jeffy25 View Post
    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.
    Yeah I think it'll be key for me to find a trusted inspector. I know the basics, but knowing what to look for as far as roofs and foundations (not the obvious cracks, etc., but the stuff people cover up) is beyond me.

    The goal is always to find that livable fixer upper and like you said, an outdated bath and kitchen is exactly what I like to see. No easier way to increase the value.

    The tricky thing about our market is that LA is one of maybe 3 or 4 areas where home values are higher now than before the bubble burst. Everything survives and thrives out here. We're renting a house in a great neighborhood. Lots of old 50's ranch style 3 br 1-2 bths mixed in with some McMansions and renovated properties. Very high value suburb area for investors. Some celebs live in the area and 2 houses down is say, a plumber in an older style house.

    Would love to buy something on the cheaper end in this area and fix it up, but owners get cash offers all the time from developers. It's pretty crazy. The house we're renting is a 3br 1bth, severely outdated, corner lot with nice yard and would be ideal. The value of the home is around $800k (mostly because of the area and corner lot with a golf course across the corner, so nice and open). When I suggested a rent-to-own scenario to my landlord she said "Oh no. If I wanted to sell, I've had offers above the value of the home. I don't think you could or would want to compete". Basically these developers will pay $50-100k above the value for these 50's single story homes, demo the whole property, put in some obscene 2 story 5 bd, 4 bth, etc. and sell it for $1.2m+

    She owned another home in the area. She bought it in 1988 for $280k. Paid it off, rented it out, got it appraised last year for $750k and sold it to a developer for $875k. They tore it down the next day. Private sales are ****ed in this area.

  6. #21
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    Quote Originally Posted by Pierzynski4Prez View Post
    I was able to get my house without 20% down and do not pay PMI. I paid a mortgage insurance premium of a few grand at closing and do not have to pay the couple hundred dollars now monthly for PMI. Highly recommend even asking about it to your lender.

    So closing was more expensive but I had the money from my previous home sale to cover it and not be paying 250ish monthly just on PMI. The amount of house I was able to afford went way up as long as I was able to cover the closing costs.
    Interesting...

  7. #22
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    Quote Originally Posted by bigmac8675 View Post
    Don't necessarily worry about 20% down. My first home I bought 9 years ago I was able to put 15% down (luckily the market was down at the time). Then last year I was able to sell that condo for a very nice profit over what I paid initially. But with the market the way it is now, even with a ~$50k down payment I was nowhere near a 20% down payment (more like 6%) on my new house as the market around here is thru the roof. But if you do it right with your lender you can avoid paying points. And honestly having PMI isn't that big of a deal as it doesn't add much into your monthly mortgage payment. Plus you can cancel it after a couple years of aggressive re-payment.

    I just suggest being patient in your search... make sure it's a good fit for you. If you get outbid (and you will) then move on to the next... don't overpay to where you don't feel comfortable.

    Don't let HOA's completely scare you off of condo's but they can be a hindrance so do your homework on what those HOA dues get you. A good real estate agent is also key. Luckily i used a close family friend both times so i trusted her and she always was real with me. There are also programs that will pay first few months of HOA for first time buyers.

    But as many have pointed out there are a lot of factors to consider. Just be patient and do your homework. Look into FHA loans or other possible deals out there that can save you money on closing costs. And also don't be afraid to negotiate the sellers paying some of the closing costs.

    Have a little fun and good luck.
    Very helpful, thanks

  8. #23
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    Just give me the money
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    Quote Originally Posted by Raps08-09 Champ View Post
    My dick is named 'Ewing'.

  9. #24
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    Quote Originally Posted by ewing View Post
    Just give me the money
    and then what?

  10. #25
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    Definitely look hard for issues during the home inspection, make sure to get a good inspector. We did ours at the end of summer. In the spring, we got water in caused by a broken down weeping system. There were red flags for sure, but we didn't know them and the inspector didn't catch them. Legally they have to disclose, but we have to be able to prove they knew. The neighbours all knew but nobody would say so on the record. The repairs cost us $20k in total.

    So my suggestion would be to talk to the neighbours before sealing the deal. Maybe they know things that the owners are not disclosing.

    And also keep a log of things if you find problems with the property. As much detail as possible.

  11. #26
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    Quote Originally Posted by Zmaster52 View Post
    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)
    My wife makes the money but she bought at the tail end of the market drop. We also have a 2 family so we pay far less than our tenants.

    Check out rockaway. it's amazing. Marine park is really cool but Rockaway is all beach and super fun.



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  12. #27
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    Quote Originally Posted by GGGGG-Men View Post
    Well put, thanks for this. This is literally all the random thoughts I had flying around my head, but it helps to see it laid out like this.






    Yeah I think it'll be key for me to find a trusted inspector. I know the basics, but knowing what to look for as far as roofs and foundations (not the obvious cracks, etc., but the stuff people cover up) is beyond me.

    The goal is always to find that livable fixer upper and like you said, an outdated bath and kitchen is exactly what I like to see. No easier way to increase the value.

    The tricky thing about our market is that LA is one of maybe 3 or 4 areas where home values are higher now than before the bubble burst. Everything survives and thrives out here. We're renting a house in a great neighborhood. Lots of old 50's ranch style 3 br 1-2 bths mixed in with some McMansions and renovated properties. Very high value suburb area for investors. Some celebs live in the area and 2 houses down is say, a plumber in an older style house.

    Would love to buy something on the cheaper end in this area and fix it up, but owners get cash offers all the time from developers. It's pretty crazy. The house we're renting is a 3br 1bth, severely outdated, corner lot with nice yard and would be ideal. The value of the home is around $800k (mostly because of the area and corner lot with a golf course across the corner, so nice and open). When I suggested a rent-to-own scenario to my landlord she said "Oh no. If I wanted to sell, I've had offers above the value of the home. I don't think you could or would want to compete". Basically these developers will pay $50-100k above the value for these 50's single story homes, demo the whole property, put in some obscene 2 story 5 bd, 4 bth, etc. and sell it for $1.2m+

    She owned another home in the area. She bought it in 1988 for $280k. Paid it off, rented it out, got it appraised last year for $750k and sold it to a developer for $875k. They tore it down the next day. Private sales are ****ed in this area.
    I can't imagine trying to compete and buy in that market.

  13. #28
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    Quote Originally Posted by Kinkotheclown View Post
    My wife makes the money but she bought at the tail end of the market drop. We also have a 2 family so we pay far less than our tenants.

    Check out rockaway. it's amazing. Marine park is really cool but Rockaway is all beach and super fun.
    Ah lucky her. Weíre banking on the market continuing to depreciate...crossing my fingers.

    None of us in the family care for beaches but we are looking at Queens as a last resort. I just like Marine Park because itís still Brooklyn and I have enough over there so it wouldnít feel so different if we left.

  14. #29
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    Quote Originally Posted by Jeffy25 View Post
    I can't imagine trying to compete and buy in that market.
    Yeah it's pretty crazy. The only tip to overcome that stuff that I've heard from multiple people is writing a letter to the owner. Not a given, but fairly often they can be swayed to sell to a young family or the right story, rather than unloading to a developer. That said....cash offer is a cash offer, and when its over what you're asking....hard to compete.

    The angle I'm starting to evaluate is seeing any purchase as more of an investment than a home. That is, it may just be a matter of dealing with stretched budget mortgage payments, PMI, etc. just to get in and knowing that there is a very very very slim chance at losing any money.....barring job security and any other drastic issues that I'm not too concerned about.

  15. #30
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    Quote Originally Posted by GGGGG-Men View Post
    Yeah it's pretty crazy. The only tip to overcome that stuff that I've heard from multiple people is writing a letter to the owner. Not a given, but fairly often they can be swayed to sell to a young family or the right story, rather than unloading to a developer. That said....cash offer is a cash offer, and when its over what you're asking....hard to compete.

    The angle I'm starting to evaluate is seeing any purchase as more of an investment than a home. That is, it may just be a matter of dealing with stretched budget mortgage payments, PMI, etc. just to get in and knowing that there is a very very very slim chance at losing any money.....barring job security and any other drastic issues that I'm not too concerned about.
    For a lot of people, the home purchase is not only their largest ever financial decision, but it's often times the most important one.

    It's also a huge separator when it comes to long term net worth and eventually reducing your cost of living as you age.

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