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Young, w/2 kids, military pay, no cash, not great credit
16 posts by 7 users
Danielle H.
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But the good news is that we DO qualify for a 100% VA loan and we CAN afford a small house! Dh and I are 22 yrs old and i have the real estate bug although i've never done anything with it. Yes i am scared. We have to small children and I don't want to hurt my family and/or make us homeless. We are in the process of buying our first home and wouldn't you know it....every house i LOVE is a fixer. Liveable usually but still a fixer. We don't plan to flip right away but wait 2 years since EVERYTHING 2 years from now will make us move. Heres a quick info about a house I looked at today that i LOVE already (and can see the wonderful way it will look). We are in tucson so prices SUCK but at least its a " bad" market...for sellers! 1700 s.f. 3/1.5 1 carport HUGE lot. Formal dining, large living room, regular dining, large bedrooms. No landscaping, decent curb appeal as is.
Some renovation costs i would guess at $15k for carpet, a/c, dryer plug, windows. No idea on the addition, garage and covered patio. Realtor said this home would easily be worth $200k w/small renovations in CURRENT market. If we held onto it for 2 years maybe $250K considering its in the DESIRABLE part of town. Anyways I am just wondering what you would do in this situation as a first time homeowner, investor/flipper. I wonder if we would be better of getting a townhome that needs less renovations but only keeping it 6 months while we fix it up. I just hate moving!! :shock: |
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Frank A.Loveland, CO 
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I know you've got the housing bug, but for your and your family's sake, DO NOT DO ANYTHING RIGHT NOW. VA loans, are the most expensive. Sure, easy to get into, but not a good deal for you. You're in the military, which tends to move you around a lot! What happens in the event of PCS? You have NO CASH RESERVES. No money to buy the day to day, seemingly small things that you end up NEEDING when you are setting up a household. You have NO CASH RESERVES while renting. And you're getting ready to take on a house, which will have bigger out of pocket expenses than renting. If you couldn't save anything before, you'll be going negative every month while owning. You probably don't KNOW MUCH, or anything about real estate. You have a place that the Realtor, who is charged with watching out for the SELLER, tells you; " if you pay $200K for this place, it will be worth $200K" . Because that's about what it will take to buy and then add all the things that you're talking about. But, guess what; YOU DON'T HAVE THE MONEY TO DO THOSE IMPROVEMENTS. Spend the next year doing the following: Build your savings Learn about REI Get rid of all your debt Figure out where you're going to live, if you can't commit to FIVE YEARS in one spot you have no business buying a house. I know this sounds unduly harsh to a young family trying to establish themselves. I've been where you are and felt I was " missing the boat" on real estate. It's a boat that I would rather have missed! There's no rush and there is no harm in being a renter. In many markets it's cheaper than owning and it's certainly less headache. all cash |
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Colin T.
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Very good advice from allcash. One thing I would like to add is find out what your Fico score is and work on raising it. There is a lot of good info on this and other aspects of rei on the forums...visit daily so you have a foundation of knowledge to work with. Keep us up to date on how you are doing, we will help you get there!! |
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Nunya B.BankerMD
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The ONLY way I'd buy right now, if I were you, is if you can legitimately find a property for less than 70% of its market value, and even that is suspect. You have no cash reserves, a dangerous position for a homeowner to be in. |
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Scott R.
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Not to diss on anyone here but theres really no way they'd be able to tell you future market value. Im currently a member of the tucson MLS, no one would of EVER thought prices would double as they did, or everyone would of bought.. at the peak, no one would of bought if they knew it was going to fall.. Tucson is on a downfall.. although it has to stop sometime, theres no guarantee it'll raise a ton in 2 year.. hopefully.. yes.. possibly.. yes.. for sure.. no!
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Danielle H.
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i am NOT exspecting the tucson market to shoot up again. i only exspect it to stabilize (i.e. reasonable days on market with a reasonable asking cost= sale when we need it to in the next 2ish years) i've been looking in the east, central and some south and have looked at well over 60 homes in the last week. mostly with kids in tow. so far the 3-4 homes that we've seriously considered have been a lennar home (brand new on valencia/alvernon), 2 on swan/22nd area and one in the irvington/kold area. we submitted an offer yesterday on a valentine st. prop but it was counteroffered and the offer we put in was our max. price so that one wasn't doable. we are submitting another offer tomorrow on a 27th st. home thats fairly nice and hopeing to get it for $146k w/all fees paid, no money down. unfortuneatly the military takes care of us but its a really hard challenge to get ahead on one income and no way to (realisticly) earn extra income. which is why everyone should support military discounts!! j/k. i know that there is NO way for us to get a " cash reserves" until both our kids are in full time school (3-5 yrs) AND it takes time to build those reserves. i am not saying its not better to have it but to wait is also putting as at a disadvantage considering we HOPE to move out of country in 5 yrs (but its a 98% certainty that we will be here for at LEAST 2 yrs) our fico scores aren't great. dh is lower 600's and i am upper 600's (since i don't have income and he does). i do hope that i can learn more about REI as is a passion of mine. plus theres no way to get ahead working for someone else! i hope we can TRULY retire at 38 or 48 yrs old. i disagree about being a renter at this point. the cost of renting is only less than being a homeowner because we wouldn't own the property (i.e. exterminator, upgrades we want, watering the lawn, buying items for a home not a rental etc). sure i understand that if the water heater breaks beyond repair we pay that $3k cost and the home owner doesn't but its a small price to pay considering we would pay $1200+ to rent a house monthly in a " decent" neighborhood as opposed to just under $1100/mo in the same decent neighborhood WITHOUT having to worry about it haveing been ripped apart by the previous tenants. (course we could move into a previous rental but the 2 houseing we are submitting offers on were NOT rentals for sure). now i would be interested in what kind of loan you think would be better for us. obviously never having had a loan i was just told by 5 or so people that " va is better for us" . i assumed because we had no down and no money for closing and having a 105% LTV was going to be hard w/conventional. course with the market we could (hypothetically) get a conv. loan on a house thats only 100% LTV b/c we haggled it down/was on the market for a long time/needed minor updates and didn't look " fantastic" but then the market falls another 3% b/c of christmas, tightening wallets etc before it goes back up and then we are over mortgaged. anywho my point is that if theres a loan program (grant program) that would pay closing costs without having to up our offers to include those costs (i.e. the home sells for $140k but we offer $148k w/seller paying our closing costs) i would love to hear about it! sorry for the book! |
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Danielle H.
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sorry to be obtuse but when the market is falling do you/REI consider 70% to be from the " high" sales we had last year or from CURRENT selling price??? |
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Nunya B.BankerMD
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Current comps, of sales less than 2 months old...but in this case with no reserves I don't know if I'd even do that. Reason being, while you don't know what the market will do, it's rather unlikely to see a 30% drop from where we are today. Not saying it can't happen, but it's unlikely. |
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Danielle H.
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thanks for that answer hairmetal i don't think its possible to get the house we are looking at for a 30% discount. i do have a question though: i am of course wanting to get the house for as little as possible. since we have a VA loan though my realtor keeps putting $5-8k on the real sales price of the house so in essence we are still paying for the closing costs! i dont mind paying closing costs but a huge reason for the VA loan is that we are SUPPOSED to pay closing costs and IF we can get a conventional loan that has closing costs included they would be cheaper right?? i am not sure what interest rate we woudl be paying as opposed to the va loan. (currently 6.75 for us). i am just wondering if its better to offer less on the house with a conventional loan for us.... |
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Tom C.Real Estate InvestorOH 
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I am going against the grain here and say.. You need to get a house and out of the rental as long as your payment is going to be very near what you are paying out it rent and expenses, but make sure you can move into it. I would rather move into a piece of junk and slowly fix it up then pay rent. As a matter of fact the first house my family ever had didn't have indoor plumbing. We used an out house for a year and half until we got enough money to put in a bathroom and septic. We also made a new wood burner out of steel and thats what we heated the house with. So if you really want to get out of the rental slump, then think about your purchase very carefully and do it. You will never save the money for a home while you are still renting. Look at your situation to this point, you weren't able to save then. You will find that any extra money that you do have will go into the house instead of pissing it away on stuff that you really don't need. At least you are putting it some place that makes sense. |
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Danielle H.
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technically we don't pay rent in the normal sense so essentially we are going from NO cost of housing to having a mortgage and everything that goes with it. we get more money living off base than on so its not that we are trying to find $1k out of thin air but we are having to pay electric, water, trash etc now whereas its FREE right now. put in another offer on a house today. the brand new one. price seemed to be better now than it was before for some reason although i am not sure why. maybe just cause they were worst case scenirio w/no real info. offered $150k with all closing costs paid. its a 1387 s.f. 3/2/2 house never lived in on valencia/alvernon if anyone wants to know. |
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Scott R.
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Well the no rent seems to sum up what I think you should do, although im in the same boat as far as I WANT TO OWN.. im 21.. no great cash built up.. no great income, and cant afford most stuff in tucson. Not to blow your boat but those areas of tucson wouldnt be consitered " prime" areas in my opnion. Prime areas would be N, NE, and some E.. nothing below 22nd.. I LOVE the new houses at Valencia/Alvernon.. but then there ARE A TON of complaints in that area.. its CLOSE to the MAJOR dump of tucson.. tons of complaints about smells and they burn stuff off from that dump.. its one of the CLOSEST areas to the dump, but the houses are brand new and NICE! ill agree. I looked there myself. Problem being, 5 years ago Lennar/US homes would of NEVER looked for land in that area, as prices started going up less desirable areas were being bought up to build houses, this area, the lot behind the jail down town, just because they could get the land for cheap. Just think about everything before pulling the trigger. I feel schools make a huge effect on the price of houses, those houses your looking at arent in the best school areas, and may hurt resale alittle. and I wanna confirm the Lennar your talking about it just south of valencia correct?! prices of new homes are going down because they're sitting. same thing with Rancho Sahuarita (parents live there) dont know if youve looked out there. i know one brand new house got discounted $140,000 before it finally sold. GEEZ! it was a bigger nicer house in Rancho but STILL.
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Danielle H.
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theres no way that we could afford " prime" real estate. i know the area isn't where people are going to buy that have cash on hand and can afford a $300k mortgage. its not why we are buying it. at least 5 of dh's friends have bought in the SAME lennar subdivision so its geared towards first time or not great credit homeowners and even military who are going to be moving every few years. honestly with the schools....from what i 've heard all of tucson and az suck big time. if your really worried about education then people are going to send their kids to private school or homeschool. my kids won't be here long enough for " real" education (or lack there of) to hurt them. 1st grade at worst and i do realize that many things happen in 1st grade but its a hurdle we'll get to when we get there being 3+ yrs in the future. now i also know that many many many people our age DON" T have kids so school isn't even on their radar. sure the south will always be cheaper vs. the transplanting the same house on an east or northeast street b/c its the south. but theres sacrifices we have to make and we realize that. we (well my realtor) phoned EVERY builder in town asking if they had anything like lennars selling points and everyone shot her down saying it was outrageous. so we did try. yes its the valencia reserve just south of valencia on alvernon on the left (if going south). now the rancho at $140k interests me. we put in offer at $150k all closing costs paid (so technically $142 or so for the actual house) and obviously rancho is nicer! if you have a reference it would be great! from what lennar person SAID (and i don't know how much i trust them) they have 25 homes or so left in ALL of tucson. they also said they are going to stop building (although i believe thats bull poop). yes the area needs to sell out first in order to get GOOD resale but they also " said" after the current homes get sold the prices are going back up and STAYING up. see it when i believe it. no its not a spec so no upgrades for the most part. we might do a few things although not until we know FOR SURE that putting the money in will come back out when we sell. lennar claims to be different with their homes. theres no design options that we saw. there were 2 houses to pick from today. one had a better view and one had tile in the kitchen and that was the only difference. i would have prefered tile but dh wanted view and well...you can't change that! we do actually have a friend that got PCSed last week and has a house in this subdivision....he paid $192k for it and of course is stuck with it. not sure what they are doing right now but it didn't sell before they left and obviously the exact same houses are $40k less right now...sucks for them and i hope they don't have to foreclose. |
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Tom C.Real Estate InvestorOH
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Dh, If you are planning on moving in a matter of a couple of years, then why are you looking at new? By time you pay closing cost, you will never recoup your money in this market in a couple of years on a new home, without adding an addition or some major upgrades. It sounds like you want to get into investing, but you want new. You wont make a profit paying retail and buying new. Thats not investing, thats just playing harry homeowner. |
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Mark T.Real Estate InvestorKY
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DH,
Mark |
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Danielle H.
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well just because i want to invest in RE doesn't mean dh wants to! he lives in the house also and I have looked at hundreds of possibilities to try and apease both our wants but it just wasn't happening. keep in mind that the new home we are looking at is discounted $50k currently. obviously theres a reason for that b/c they aren't selling but we also aren't exactly paying retail for it either. 2 yrs in the MINIMUM we'll be here. we can " choose" to stay longer when that point comes around. dh is in a job where hardly anyone gets moved and wants to cross train into a job where there aren't a whole lot of bases to move to (one of them being righ where we are). so if we ask to stay its likely we will. it could be 7+ yrs before we move! :shock: i was just saying that we will be here long enough for it to make sense. if we were always waiting for things to be perfect then we would never buy!! (and neither would a lot of other people). to update everyone: we got a counter offer today that was only $1000 more than we offered so we accepted and signed the contract today. just waiting for official loan approval and the waiting period and then loan closing and we'll officially be first time homeowners! thanks to the resources of this board i found tucsoninvestors and it sounds like a great match for me. i am going to try and read/learn/watch what i can while hecticly moving and then attend one of their initial meetings in mid november. i am taking this house and the fact that we need the extra money and the passion i still feel for REI to MAKE myself become an investor. i hope to start being a wholesaler by late december and then pay off debt and save up $10k or so before jumping in myself. I WILL be REI by this time next year. I will flip a house even if its only a cosmetic update I will get my feet wet! (muddy??? dirty? |
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Posted: 10/07/2007 at 11:52PM
