best way to buy a house

Discussion in 'Politics & Religion' started by Gordon Gekko, Jun 22, 2002.

  1. i'm under 25 and i want to know the best way to buy a house. like some other people have said, buying or renting a house and fixing it up is definitely the way to go. however, i don't even have 1 property yet. what's the best way to get started? i'm willing to put work into it. also, there is speculation that the housing market may decline. if that is the case, how could i use that to my advantage? is now a bad time to buy a house and fix it up? or should i wait? if the housing market declines, how long does the cycle usually last? like when would it be good to buy a house and fix it up again? to anyone out there who has real estate experience, knowing what you know now and if you were under 25, what would you do?

    thanks

    p.s. i have perfect credit, zero debt, i have a 2001 car 100% paid for, i make money from trading, but it's gonna be a few years before i really have a good amount of money (100k+). although all my current income comes from trading, i would be willing to get a job just to pay a house payment, etc.
     
  2. Banjo

    Banjo

    The rules of real estate are location, location, location. We are in a bubble, just as crap stocks were expensive yet managed to find a market in the stock market bubble so will crap houses in a crap location. They will also fall first. Find a house in a stable or uptrending socio- economic location that is a "fixer." If you can't come up with the downpayment find a trusted friend to invest with you. You must have or be willing to develope the skill sets of construction, mostly just a lot of hard work and reading do it yourself stuff. There are "no doc" loans available from many mortgage providers that will write a loan for anybody with 25% down.
    One of the best deals around for young people that are willing to do the work and move on is the tax exclusion on the profits made on the sale of a house after having lived in it for two years. You have the right idea , it will take a lot of research and work, especially the first time around.
     
  3. Get a Realtor.
     
  4. GG,

    Check with some of the local groups regarding assistance for first time buyers. Not the bogus stuff that realtors try to persuade you with. I'm talking agencies that give downpayment funds, etc. Hard dollars are out there.

    If you are in California, there is one agency that I can't recall that gives a 0% interest downpayment for first time buyers. You have to pay it back upon sale of the property. Shouldn't count against any of the income ratios.....

    Definitely use a realtor they know all the stuff that is coming out from the MLS. Whatever you do DON'T sign anything that ties you into the realtor unless they are completely clear about the type of property you desire. Nothing is more frustrating than having a dipshit realtor taking you to top dollar, turn-key properties when you desire fixer-uppers. Unfortunately some of the realtors scoop up the best deals before they ever reach the market.
     
  5. About buying houses send a message to me with EliteTrader...

    ....if you are NOT SERIOUS....

    Please don't waste your time or MINE.

    Rocky

    P.S. I have been investing in single family houses, in the TampaBayArea,Florida, for years...current inventory + or -...."40"
     
  6. hsinvst

    hsinvst

    GG:

    I may not be the best person to ask when it comes to getting started since there were several factors in my past that helped me and which most people would not have the benefit of nor could even begin to relate to.

    But what I can give you is the benefit of my life experiences.

    I cannot help you from the standpoint of how to learning to fix up old homes, dealing with bank loans, etc… for these reasons:

    · My dad was a carpenter by day and built our first home by working on it only on the weekends (usually on Sunday). I was 6 years old when we started and 16 when we finished. I learned a lot about electrical, roofing, installing tile, sheetrock, plumbing, framing, interior finish, etc… I very rarely pay anyone to do anything to these real-estate investments. The savings go back into real estate. Most people know nothing about carpentry. I got lucky.
    · My dad was an auto mechanic by night and had his own auto repair shop next to our home. I worked in his shop every day after school till 10pm Monday to Friday and from 8am to 10pm Saturday and Sunday (when we weren’t working on our house). I was 6 years old when I started. I do all of my own auto repairs and very rarely pay anyone to do so. This therefore allows me to go without a car payment for many years and the savings go back into real estate. Most people know nothing about auto repair. I got lucky.
    · From an early age I knew I wanted to get into some sort of electronics or computer field. This was 27 years ago. You would not believe what people are willing to pay me as a Pick Programmer. Who would have thought computers would be such a big thing today especially in the 60’s when I decided I wanted to get into computers for a living. Some of this money goes into real estate. Most people know nothing about computer programming and software. I got lucky.
    · 16 years ago I was given my first PC. I proceeded to take it apart and learned about PC hardware and software. It came with an early version of a Quicken like software. I built 4 PCs and a home network system (I love hardware and programming) and have been using Quicken for many years now. Quicken has allowed me to keep a tighter hold on expenses and therefore saved me money (for real-estate investments). Most people know nothing about computer hardware. I got lucky.
    · Since my parents paid cash for everything they had a big wad of cash I could tap into when it was time to buy House 2. Cash IS king. Most people can’t say they have parents who have no credit history because they pay cash for everything including their house. I got lucky.

    Helpful advice:

    Lifestyle:

    · Don’t take on a hobby that’s expensive.
    · Live within your financial means. Don’t pull a Fernando on me and get into jewelry and fashion. Like Fernando Lamas once said “It’s better to look good than to feel good”.
    · Work for yourself. Your “Day” job pays for living expenses (“Working for someone else”). Your other job (“Work for yourself”) will put you over the top. This may mean that you give up some of your weekday evenings and weekends.

    Financial:
    · Use Quicken or MS Money as soon as possible.
    · Do not use Credit Cards unless you have the discipline to pay the balance off each month.
    · Don’t ever buy a new car. Buy a used car 2 years or older and do as many of the repairs yourself.
    · Contrary to popular belief, buying a house to live in is not an investment. It will be your greatest expense (new roof every 15 years, water heater every 4 years, A/C unit every 6 to 10 years, painting interior/exterior every 5 to 10 years, new sink faucets every 5 years, carpets every 5 to 10 years etc…). Look at your lifestyle, marital status, responsibilities (kids, parents) etc. before deciding to buy a house to live in. It may be cheaper to rent.

    Real Estate:

    · If you want to get started and you don’t know how to make at least 90% of the home repairs yourself, find some other way to make money. In the beginning it’s tough but after 5 or 6 flips you’ll have the money to pay someone to help you with some of the repairs. The exception to this is if you have a friend or family member who is knowledgeable and who is willing to help you dirt cheep.
    · Buy homes in “Bread and Butter” neighborhoods like I did. The cars of these people represent 80 to 90% of their assets. These people live from day to day and never make wise investment decisions and for this reason you will always have the upper hand. The homes in these neighborhoods usually suffer and therefore most likely will go up for sale as “fixer uppers”. Your return on investment is likely to be much higher. This is not “taking advantage of people” but I feel rather sure GG could provide a suitable phrase here like “Greed is good”.
    · When you do buy, only make cosmetic repairs and improvements. Don’t fix it up as if you wanted to live in it. Paint, do a little landscape and then sell the hell out of it immediately.
    · Know your strengths in home repairs. Don’t let a repair “eat your lunch”. Time is money. Even if you know how to make a repair but it would take you 2 weeks to complete yourself, hire a Professional. A pro can do the same thing in 2 days. The object here is to get rid of the house quickly.
    · In a hot to medium real-estate market, don’t rent. Flip it as soon as possible. Don’t take more than 3 months to fix it and sell it. In a real-estate market downturn, rent the hell out of it and squeeze as much profit as possible until you can sell it first chance you can.


    These are only a few nuggets of “truths” I’ve learned the hard way.

    Now get out there and “make me proud…..”.

    On another note, GG I need a mentor in the ways of day trading. This is one area I am very new at and I’v been told that the best way to start (even better than buying books etc…) is to hook up with a mentor.

    Would you have any recommendations in this regard? Thanks!!!!!
     
  7. sub7slak

    sub7slak

    I would imagine that at 25 you are not really ready to settle into a permanent home for the rest of your life, so buying your first home with resale value in mind should be your first priority, because I am willing to bet that in just a couple of years you will discover many things you may not like about your first house, perhaps the location was too far from the city's action, or you found out the location may be filled with people you don't like, there could be a million reason. However, I have heard that a specific type of mortgage called "full-interest or all-interest" is getting popular, you should ask the bank like WM about this one. I think the basic idea is that for the first five years of the loan you pay nothing but interest and zero to your principle, but you will get a percentage point lower than even the best rate out there, especially with your good credit. This essentially allow you to have lower monthly mortgage, and over the course of five years you pretty much save anywhere from $10K to $50K (depending on your house value) and have that available to invest in something else, think how much more you would make with an additional $50K in risk capital. After five years, your rate becomes adjustable, but by that time it wouldn't matter cuz you'll be selling your house anyways. Even though you have no equity on the property, in this real estate market right now it is believe that the house value would go up by a huge amount enough to cover not only the original cost of your purchase price and the interest you paid over the five years, but would actually give you a good profit if the location is right. You then can roll that over to another property so to avoid any taxes. Not sure whether FHA will sponsor this type of loan though, check with the bank. Hope that helps!
     
  8. OHLC

    OHLC

    >is now a bad time to buy a house and fix it up? or should i wait? if the housing market declines, how long does the cycle usually last? <

    >Time
    Depends on wether or not you consider this house as an investment or a place to live. In the later case, and provided you will always live in a better or equivalent house each time you may have to relocate, the market value is not so important. The price might be lower when you will sell your house, but the next one will also be cheaper to buy.
    So, the time you acquire is not so important as the house price vs what other houses are worth at the same time.


    >should i wait?
    IMO, wait until early 2003.
    -the RE market should have completed its first impulse downward
    -the real economy will be worse, hence, the actual sellers will be more wiling to compromise instead of placing 'limit sells'.
    -the lower liquidity will enable you to place numerous low bids on various houses.


    >how long does the cycle usually last?
    2005 I think, you will notice when the rents start going higher, while property value is still down.
    Leading indicator would be an increase in the constructible land speculation.

    Just my opinion.

    OHLC