Monday, March 13, 2006

First House

I had dinner with a friend and his dad, who is a real estate broker. We talked for 3 hours about how to get started, no money down loans, government rentals and flipping properties. It was very interesting and now have a great connection if I have any questions or need help.

I start my job in August so I will not have much of a paycheck or steady job until then. I have to wait until at least a month on the job to be able to get a loan so that puts me somewhere into September/November. I plan on looking now to get familiar with the market and to see what is out there and what I want. This is what I have in mind:

Price: $125,000-$150,000
Solid structure but needs work: Foreclosures are a good place to start.
Find renters: Find trustworthy friends that won't trash the place or mind me renovating while they live there.
Good school district: Families typically move into houses around this price range so the school district is very important which helps the resale value.
Low taxes: The lower the property taxes... the better.
No down-payment loan:

  • I am able to get one with the following criteria:
    • 3 open lines of credit that are used frequently: Credit Card, Gas Card, Home Depot Card.
    • 1 year of previous living payments: I can use the rent payments while I was in school.
    • Good credit.

The Plan:
Buy a undervalued, foreclosed home, with a no down-payment loan (watch out for high interest rate). Fix the house up with the money I saved from not using it on the down payment while my friends and I live there. Get the house re-appraised after the renovations and then re-finance. I will now (hopefully) have more equity from re-financing to play with. I can use the money to either put more money into the house, buy another house or for other investments. If everything goes well I can sell within a year or two and move to a house of equal value (new appraised) and avoid capital gains taxes.

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