Personal Home...Did you pay retail?

Question

I'm curious to know, being that most of us on here are RE investors. How did you guys purchase the homes that you live in? Were they foreclosures, short sells, rehabs, custom built or did you just pay retail?

Rich Weese · Answer

There is an old saying in RE, "You may name the price if I may name the terms". All the previous posts discussed only price, so here is another train of thought.
     I jus purchased a brand new home that sold and appraised at $299,000 as an owner occupant. I received a 90% loan with seller/builder giving some concessions on closing costs. On the surface this looks like a strictly retail deal and not a very good one.
    I put $29,900 down on this home plus some closing costs. Now, What if the builder/seller purchased some counseling from me for $40,000. I do charge exorbitant fees at certain times (although all the counseling, advice and suggestions on BP has been/is free). 
    If this was the case, I now would own a home for 13% under current appraisal, on a 30 year note with no money out of pocket with an unbelievable low interest rate loan with interest, taxes, and insurance fully deductible.
    This would be a "good deal" in my mind because of the terms. Price was only one consideration. Rich

Mitch Kronowit · Answer

Back in 2002, lenders were handing out money like candy on Halloween. It was easy to find 100% financing.

One lender, Homecomings Financial, was offering 103% and 107% financing (No PMI) to owner-occupant buyers. I didn't need the larger 107% loan, so I opted for the 103% financing. Basically, I bought a house for $350,000 and they loaned me $360,500. The extra covered all closing costs and reimbursed me for the appraisal and home inspection that I had to front during escrow. So I pretty much got the keys to a home for free, all I had to do was make the payments.

Some lenders were even writing 2nd mortgages up to 120% CLTV!!!!  Crazy times, indeed... but look where it got us.

Steve L. · Answer

I paid about 90% of ARV.  The payment is a lot less than renting the same thing.  Plus I was getting married and we had to move quick or sign a lease.  Let's just say my wife got what she wanted ;).

Cheryl C. · Answer

I'm sitting in my house that I bought at the Courthouse steps.  30yrs ago we bought our first house.  It was in foreclosure.  What followed were a series of handyman specials and distress sales.  I've never paid retail.  I read everything I could get my hands on and bought at age 22.  You make your money going in.

Jackeline Petrucci · Answer

Mike, we are renting as we move our money because we believe the biggest bargains in real estate are going to come between the end 2013 and 2015.  By then w want to have tons of cash ready to buy long term properties including my our home.  Buy I guess it depends in what state you are in.

Mitch Kronowit · Answer

I bought our personal residence in 2002, just as the Stage 1 booster rockets on the housing bubble fired. At the time I was vaguely familiar with foreclosures, but had never even heard of short-sales and REO's. I offered about $3,000 over list price because houses were flying off the shelves. It was a seller's market like no other. Our home had only been on the market one day when my offer was accepted. Even though it's difficult to comp, our home is still worth roughly $75k over the purchase price.

Terri Pour-Rastegar · Answer

Our very 1st house was bought from an estate sale.  We paid about 75% of value.  But that was before we were involved with investing.

2nd house we paid full price.  I really don't mind full price for my primary residence.  We were there 10 years and made a killing selling it right before (I'm talking 30 days) things really started to plunge.

The house we live in now, we bought at an estate auction--paid about $30K less than it was worth then.  We immediately rented it out (all we had to do was clean it), and kept bringing in good rental money for about 4 years.  Then we moved into it and renovated it while we lived here.  The plan was to flip it.  I would still make money on it if I sold it now, but not as much as I'd like.

We're going to rent out our current home for awhile and see how the market goes.  I'd like to sell it for a tidy profit before the capital gains grace period runs out (gotta live in it for 2 of the last 5 years or whatever).

We're almost done building our dream home.  I can't wait.  We bought the land several years ago for a good deal--not a steal, but good.  It's still worth at least what we paid, and probably a little more.  The builder we used is priced very fairly and does a great job.  The house will definitely appraise for significantly more than our investment.  But I wouldn't care if it didn't.  This is my personal home, not a business investment.

Rob Gillespie · Answer

Heck no!! everything I do has gotta be a deal. We built and continue to every day. Our family worked on the main house, and general contracted the rest at deep discounts. My driveway is over 1000 feet in all, I bartered that for my  real estate services with an asphalt company. 
I have a 5000 sq ft. building that is for parties and to store cars, I moved it from another property after bartering it for my guys to build her a front porch. 
Most recently, I am having a regulation tennis court installed as part of a real estate deal I structured. ( using none of my own money or credit), and I can go on and on!
So in closing, I live pretty freakin well, and have even though I do this without leveraging the property, I would say if we did get a loan for the money we had in it, we would be at about around 30-40% LTV. 
I thank God for my ability to negotiate! :mrgreen:

Joel Owens · Answer

It was a good deal for the market at the time 7 years ago but now it's underwater in value.That's fine by me as I don't view where I live as an investment.Have a low interest rate and use the extra money to pursue below market purchases.

It was years ago with a 100% loan so if I had put a bunch of money down and it was underwater I would be upset.With nothing in it and a fixed low mortgage payment it's not a concern.

Elena Smith · Answer

I'm currently renting as I just moved to a new area, but my parents got a deal on the land we purchased by going in with other friends and then splitting up the parcel, and built on their own back in 1998.

Personal Home...Did you pay retail?

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