PLEASE HELP! Use mail outs and buy with conventional loan?

Question

Need Advice. I am looking for one single home to become my primary home and turn into rental in 2-3 years(will be forced to move because I'm in the military).  Has anyone used mail outs to find a motivated seller and then closed a deal using a conventional loan?  I don't know exactly how it would work, but I don't want to pay the approx 330K which would be market value where I'm looking for a 3/2 and about 1500 sq. ft.

I got approved for 350K conventional (5% down).  Say I do a small mail out campaign to absentees and find a seller in order to find the same house style I want, but for as cheap as possible.  How would it work to buy the place with a conventional.  Does anyone even do that? What would be my agent's roll in the deal?( I would need her, I think, at this point to help with the closing and working with the seller to get all the requirements like appraisal, termite inspection done if using the conventional loan) .

This question is a little confusing(even to me), but any help would be greatly appreciated. I plan on beginning real estate investing in the future, but can't right now because of military requirements.  I just don't want to pay full retail and pay more than I should off the MLS because a good deal now will help me in the future with more equity and everything else.

Greg Fend · Answer

@Matthew Martin,

A site that I often look at any time I'm due to move to a new duty station (I'm also active duty military) is www.militarybyowner.com.  It has some good listings for places for sale and/or rent based on proximity to various military installations. If nothing else, it can give you an idea of what's in the area.

I have no affiliation with the website...just thought I'd share one of the tools I use.

Happy hunting!

Greg

Christina R. · Answer

Sounds like you have a hard -working realtor on your team already!

Matthew Martin · Answer

Thanks everyone for your help. I spoke to my agent and she said that she would do all the letters for me free of charge.  She wants a picture of my family and she will go to her brokerage to get the list of absentees in the area we want and send out a letter with the picture on it.  We did get pre-approved for the conventional loan, but need 5% down.

I feel like it's at least worth a try to save any money on the house. Especially since the MLS listings she sent us don't have any houses that we are particularly fond of.  We have time to wait for more listings to pop up, so why not send out the letters in the mean time and see who bites. Especially if she's paying for it.

Again. Thanks for the input everyone. It has given me more options to consider.  Especially the multi-family option.

Andrew Syrios · Answer

Matthew, I'd recommend considering a duplex or fourplex if you can get FHA financing, especially since you only plan to live there 2-3 years. This would be a great way to jumpstart your rental business. As far as getting a loan goes, if the property is in disrepair, it will be harder to get a loan. But if it is in decent shape and is only distressed because the person is struggling to make their mortgage or what not, the way you find the deal shouldn't affect the financing.

Joe Butcher · Answer

@Matthew Martin others can answer more in depth, but one possible problem is that when you are getting a discount it's usually because the property is distressed, and many banks will not loan on a distressed property. If it's FHA even more so.

Thats not always the case, but another thing to consider is the cost (in both time and money) in sending out mailers and negotiating with sellers.

Elizabeth Colegrove · Answer

My husband is active duty. We have done what you are describing regarding buying for a personal and renting out as a rental when we leave. We have done everything off of the mls and done well. We have typically bought short sales and foreclosures. Our agent has been intimately involved with our success. She has shown us the good deals.

I have thought about sending noticed to the few areas I like but so far it hasn't made sense. Have you thought about using your va loan?