Looking to purchase property with downpayment

[Samuel S.]

Hello everyone!
My name is Samuel, I'm 24, and married. I found the forum after countless hours of searching through different website like metrobrokers.com, hud.gov, bidselect.com, georgiamls, craigslist.com and more :) for property. Thank you for everyone who contributed their time to make that forum such a great place of advice I'm more looking for a word of advice from some of you, EXPERIENCE people :) I'm in commercial construction, own the company with this year gross sales hitting $1mln. I managed to save up so far $42,000 this year, pay of the car, wedding :) and all credit cards. My wife is working on W-2 and she is the one able to get a loan (I'm 1099, with thought of switching to W-2 next year) I heard a lot of people talking about buying property straight from the bank and bargain for it. I know couple realtors who adviced me to wait for the tax credit to end, when the selling will cool off a bit (I'm first timer). What would you advice me? I live currently with my wife's parents in Atlanta, GA (my father in law working for me) and I'm helping with all the bills. I have couple options. Can buy property for rental and keep living with the parents, buy property that needs some work done on it, fix it up and resell it or buy a house/townhome (something up to $120k), live in it, pay it of in 2 years and than buy something else (having equity already)

[Jon Holdman]

I prefer to keep investment separate from where I live.

It sounds like you're financially stable, have the debt and therefore spending under control, and have some cash. If you want to buy a residence, go for it. I don't believe the "buy the biggest house you can afford" nor the "trade up every few years" myths promulgated by the real estate industry. Buy something affordable that has the features you like in an area you like. Plan on dying in that house. Pay it off quickly. Once its paid off, never re-mortgage it. Yes, people will claim you have "trapped equity". Usually people who have something to gain from untrapping that equity. But you're guaranteed to always have a roof over your head for minimal cost and you have an asset that could be liquidated in a pinch.

I don't want to live next to my tenants, so I would not recommend a duplex or triplex where you live in one unit. Rentals are a good business if you can buy for the right price and get the right rent. Read in the rental property forum to learn about true expenses and what makes a good deal.

Given you background in construction, you should have the skills and contacts to do rehab work. That gives you a leg up compared to many buyers. You could probably buy dumpy houses that will be good rentals, fix them, rent them and have nice cash flow. Again, read in the rental property forum about true expenses to avoid the rental property "big lie" -- Cash flow = Rent - PITI. Uh, no, it doesn't.

If your family will put up with it, changing houses every two years can really work out well. Buy a dumper. Fix it enough to make it livable. Move in. Spend two years fixing it up nice. Sell. You completely avoid taxes due to the two-of-five-years primary residence exclusion. My wife would kill me, though, if we tried this.

Buying REOs (bank owned properties) is a slow, heartbreaking project. Look at a lot, make a lot of offers. When I'm actively buying (just about to start again), I'll look at 10-12 houses every weekend. I work a day job, so hard to look during the week. In a good week, three or four will get offers. I keep making offers until I have a good deal in hand and ready to close. I've found banks won't come off their listing price very much, though other have reported getting low-ball offers accepted.

Good luck!