Should I buy or wait? (Alexandria - Huntington area)

Buying & Selling Real Estate
8yFollow

Should I buy or wait? (Alexandria - Huntington area)

Julius F.
Falls Church, VA · Member since 2017 · 33 posts · 9 votes

Happy Holidays, and I wish everyone great success in 2018!

I have recently caught the REI bug. I am looking to buy and house hack but there are a few things that worry me. Just looking for some advice/feedback from others as to if I am in over my head or simply crazy.

Currently, I am renting a room in a house for $800/mo, but I am looking to move. My main goal for renting a room was to pay off my student loans, which I have done.

I’m now looking to buy in Alexandria (specifically around the Huntington area or a little further south along route 1) to be closer to work, in order to cut down my commute time. In addition, I would rather not waste money on renting (putting my money into a black hole). The area I believe is a hot market, since it is located close to the metro and it seems to be a growing area (class B or C area?).

Finances:

- 8k saved to invest (most of my savings)

- Buying price range 350k or lower

- Use of a VHDA loan 3% down with DPA and MCC

My concerns:

- If another opportunity comes up and I leave the area (say in a 1-3 year range).

- Going against the requirements of the VHDA loan as a first time buyer (and wasting it) since I believe the house has to be a primary residence for 5 years. In addition to paying back the DPA.

- My exit strategy if something does happen, since in this time frame I will have little or no equity in the home if I sell and I could lose money by selling (not sure if I can rent it since it is suppose to be my primary residence).

I've thought of just looking for an investing property (not a primary residence), but obviously not enough money at the moment to invest in this area with a down payment of 20% without assistance from other investors.

I could also try to buy in a good location in Maryland but the commute to work would be tough.

Questions:

- What are your thoughts on the situation?

- What exit strategies would you have in place to prevent losses?

- Do you have any experience or knowledge of the VHDA loan and going against the requirements?

All advice/feedback is welcome and greatly appreciated.

0Reply
32 views

Most Popular Reply

Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
8y
Julius Fitzhugh With little down payment your most likely going to have trouble finding a property that will cash flow. Also if your concerned about possible relocation in a few years let’s look at it a different way - what is the upside of the investment ? How much do you think you would make ? What are the risks ? If your forced to sell and their is negative equity your in a short sale situation which will crush your credit and I believe you have to wait X amount of years before you can buy again. With lower amounts of cash I would recommend alternative real estate investment whether it be in crowdfunding, partial notes or tax liens / deeds. In those if you lose your $ your not also crushing your credit.
7e investments53 Reviews
WebsiteView Page
1Reply
See this reply in the discussion

11 Replies

Jump to latestLatest
  • Account Closed
    Willmar, MN · Member since 2014 · 3 posts · 2 votes
    8y
    We can never time the market right, so wouldn’t worry from a macro perspective. From a micro perspective just find a good deal and you’ll be find. Buy on the low end of your budget and put some sweat equity into it. That way if you need to ditch it you wouldn’t lose any more than renting during that period. If you are really unsure and your lifestyle allows, buy something like a duplex to put someone on one side helping to pay down the loan. If you need to move you could likely cash flow it by renting both units.
    1Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    8y
    Julius Fitzhugh With little down payment your most likely going to have trouble finding a property that will cash flow. Also if your concerned about possible relocation in a few years let’s look at it a different way - what is the upside of the investment ? How much do you think you would make ? What are the risks ? If your forced to sell and their is negative equity your in a short sale situation which will crush your credit and I believe you have to wait X amount of years before you can buy again. With lower amounts of cash I would recommend alternative real estate investment whether it be in crowdfunding, partial notes or tax liens / deeds. In those if you lose your $ your not also crushing your credit.
    7e investments53 Reviews
    WebsiteView Page
    1Reply
  • Amy H.
    Rental Property Investor · Richmond, VA · Member since 2017 · 295 posts · 229 votes
    8y
    Julius Fitzhugh Hi! Congrats on looking to purchase your first home. I work for VHDA so feel free to reach out if you have any questions! I love the down payment assistance program, helps a lot of people get into their first home!
    1Reply
  • Jasmine Benford
    Real Estate Agent · Hampton, VA · Member since 2017 · 88 posts · 24 votes
    8y
    Hey Amy Herzing ! What does VHDA consider a first time homebuyer for the down payment program?
    0Reply
  • Amy H.
    Rental Property Investor · Richmond, VA · Member since 2017 · 295 posts · 229 votes
    8y
    Jasmine Benford A first time home buyer for VHDA is considered someone who hasn’t owned a home in the last 3 years. Unless you are purchasing in an area of opportunity (usually south west VA areas).
    0Reply
  • Julius F.
    OP
    Falls Church, VA · Member since 2017 · 33 posts · 9 votes
    8y

    @Account Closed

    I will PM you. I have a few questions about the VHDA loan.

    Thanks everyone!

    0Reply
  • Shawn Clark
    Investor · Middle River, MD · Member since 2017 · 191 posts · 127 votes
    8y

    Don't buy unless:

    1) You can keep it for several years. Preferably at least 5. (or forever)

    2) You can buy one that needs rehab you can do yourself for significantly less than the resulting equity increase.

    3) It will cashflow without you living in it and you don't mind keeping it from a distance. Consider the cost of property management.

    4) You just get a smoking deal of any kind, which always gives you equity, which itself always gives you an exit.

    1Reply
  • Julius F.
    OP
    Falls Church, VA · Member since 2017 · 33 posts · 9 votes
    8y

    @Shawn Clark Thanks, I am looking for a property that can meet those requirements. I prefer not to sell (referring to #1), but I just want to keep my options open if I need to exit for some reason or another. Will surely keep these points in mind while I am searching.

    1Reply
  • Shawn Clark
    Investor · Middle River, MD · Member since 2017 · 191 posts · 127 votes
    8y

    "I've thought of just looking for an investing property (not a primary residence), but obviously not enough money at the moment to invest in this area with a down payment of 20% without assistance from other investors."

    Keep in mind you can buy a primary residence and then move out and rent it later, keeping the residential loan. Or house hack, as you know. As long as you use a regular FHA loan that doesn't have a 5 year requirement. No one usually cares if you move out later. Most lenders don't check, unless it's more of a long term requirement, like the VHDA, then I wouldn't do it. You can get one or two investment properties using primary residence loans that way (I know you can get one, the second can be trickier, and you may need the income to be approved for two loans at once). But at some point you will need to build up enough cash (or partners) to get away from that.

    1Reply
  • Julius F.
    OP
    Falls Church, VA · Member since 2017 · 33 posts · 9 votes
    8y

    @Shawn Clark

    The VHDA loan was kind of the first thing that was offered to me. From the research I have done they talk about the benefits and good points of the loans, but there is little information regarding the requirements. As I talk with others (such as @Amy H., thanks again Amy), the finer details of different loans start to appear. At the moment I am looking to focus on just one deal, but I will surely keep that in mind once I start looking for other deals. Thanks. 

    1Reply
  • Shawn Clark
    Investor · Middle River, MD · Member since 2017 · 191 posts · 127 votes
    8y
    Originally posted by @Julius F.:

    @Shawn Clark

    The VHDA loan was kind of the first thing that was offered to me. From the research I have done they talk about the benefits and good points of the loans, but there is little information regarding the requirements. As I talk with others (such as @Amy H., thanks again Amy), the finer details of different loans start to appear. At the moment I am looking to focus on just one deal, but I will surely keep that in mind once I start looking for other deals. Thanks. 

     Getting that first one is important! Good luck!

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free