Real estate questions

[EweSheep]

Hubby and I found a wonderful fixer upper of a house out in the country, next to a highway and has three acres of land. Brick style one floor, ranch style home for 38,900 listed price. We took a look at it yesterday with a realtor and was pleased about the size and the potential the house have once we fixed it up. Three years ago, it was listed over 110,000 and the guy that had it, lost his job and bank repo'ed it. No out farm buildings. Just flat land with corn around us and a neighbor with an older house. Houses out in the country of that price are fixer uppers and they get nabbed FAST, I mean SO FAST that the house has been on the market since July 24th and two people are interested (likely "flippers").

What does it needs done? Certainly a new roof, new furnance and someone to finish or gut the bathroom (they did everything but they didn't finish up the spa, and we have no intention of getting it finished, so it will come out) and paint the walls, remove wall paper, replace all the windows and tear out carpet and put down lino or tile throughout the house. Good bones, that house! I would assume something of the neighborhood of five thousand to ten thous to get it all done. Many of the stuff would be on discounted racks, Craiglist and freecycle and Humanity overflow would be the places we would be hitting.

The kitchen is fairly new, tiled and really nice cabinets. Besides all the walls in that house to be painted in much softer colors, that can wait. The roof, the furnance and windows are the first three biggies.

Now since I have my daughter in private school, yep, its expensive! And the house location has better/excellent schools which she would be bused to school, five miles away. All are newly built schools in town. That alone would save a big chunk if we get the house and put her in that public schools.

The other thing is we have to sell our existing house. Going to the bank today to guess how much I would have to take on.

I've been reading alot about these ideas that I need your input and the risks involved:

1. Put the house up for rent until sold....we do not want to be landlords. Too much of a hassle and I m guessing I would have to charge so much more than the mortage to cover the payments PLUS insurance, along with lawyer fees, etc. Our house USED to be a rental home for many years until we bought it.
2. Take on a second mortgage.....that would be doable IF the payments are low like a car payment but we can not live in it during the winter unless we have the furnance or electric baseboards installed. Or mini propane heaters in the rooms and one fireplace in living room. I know propane is very expensive and electric is not that far off either. Solar is out, too costly. There has to be a trade off here.
3. Sell our existing house on contigency...the problem is there is two other offers........I have a feeling there will be a bidding war. We will have to figure out our limit. Nor the bank want to wait too long for us to sell our house.
4. put the house up for as low as we can, to get it out FAST like "as is" or low offer, possibly a short sale. Our house needs to be finished up or finish remodeling the rest of the house, like painting walls, installing upper and basement windows, tankless water heater (we bought it but not installed) and in future, the furnance will need replacing if the new owners want a fuel efficent one.
5. One mentioned about "bridge loan" or a equility loan to make the down payment on the new home......... Im not familiar with this.....

We have no downpayments so I am sure we can figure something out and see if bank can include downpayment in the loan. This will not be the "first time homeowner". Otherwise, I'll ask relatives for downpayment or take on a credit card with low interest.

Our credit is very very good!

So what would you all do?

 

[EweSheep]

Went to bank and here is what the loan officer suggested to do:

1. Rent out house, get a 10,000 down payment on the new house.

2. Make offer and sell the house on contigency.....it will take around 120 days to sell a house in this town. Sure its a buyer's market but a nightmare for sellers.

3. They only offer 80/20 loan so 10,000 is the minimum needed to get the house. Even the payments are much cheaper.

Well it don't look like we will be moving anytime soon, as the way the market is.

 

[michickenwrangler]

My mother is looking to buy a house here in northern Mich and is facing some of those same questions. She lives in the Ann Arbor area (about 3 hours south of us) and still owes money on her house. There are 2 houses she is considering here: an older style farmhouse built in 1906 and a small house built in 1948. She likes older style houses. There are pros and cons of each. Both are in nice neighborhoods in the same town. The first is close to the downtown area/shopping while the other is at the edge of city limits and near quiet dirt roads to walk her dogs. Both have large lots and both need some work (1906 house has an unfinished addition and in need of some general maintenance, 1940s house has the ORIGINAL furnace and in need of some updating) The 1906 house is $48k, the other is $40k. Again, her main issue is what to do with her house: sell, rent, whatever.

Hard to say what to do.

 

[Mattemma]

It is hard to sell at a loss,but that is what I would do.We have considered to sell our own place for 10k than what we paid for it.Problem is there is so many forclosures around us that even that deal isn't a good deal for buyers.

As long as you did not go into the red with a loss I would consider dropping the price of the selling home in order to get that good deal on the home you are buying.Someone else is selling at a loss too.It is just like swapping losses,and trying really really hard not to think about what you paid for a place.That house you want for 39k was sold to someone for 110k just a few years ago.Sad isn't it?

Have you tried other banks? Renting is a nightmare.We are considering just paying off our house early and THEN buying another house,and then keeping both. I just don't see the economy getting better.People will struggle with rising prices across the board.If you can skimp by living frugal you will make it AND reap some benefits.

We have our kids in private school too.Thousand each year. Nice school,but not really worth it,but the kids want to stay so we pay.Just four more years.Maybe 3 if our son opts to do 5th and 6th grade work all in one year!

Good luck whatever you decide.What about refi the current hose and tack on the 40k cost of the new house to that mortgage?

 

[EweSheep]

Hubby went to a few more banks...not looking good so far. They are very nervous about loaning out the money because they would need to be inspected before they consider loaning the money out to us. Said it is the new "law" that after it has been inspected, we must hire contractors to do the house instead of DIYer (we HAVE experience in renovating, so are our extended members of our families with years of contracting, building and restoring (they are no longer "licensed" but their knowledge comes in handy)! I never heard about this new "rule" from the first two banks and the last one, hubby went to, said we can not do it ourselves.

I've contacted the real estate person to find out WHO was the bank that owns that house and see if we can work thru them instead of our town's banks. I hate it when the banks are nervous.

I don't know if it would work if we can just give them the offer and see if we can get a loan elsewhere, outside of town. The bank that owns the house is in Clinton, IL and we are seeking loans in Decatur.....so maybe locations might be the difference.

We are not giving up just yet. Once we get accepted by the bank, we will put up our house up for sale, probably on the contigency contract. I don't know how many people would do this.

 

[michickenwrangler]

Back in the 1980s, there were houses in Detroit that could be bought for literally $100 BUT the stipulation was that you had to put so many thousands into these houses

The house that you want to buy, is it HUD or a foreclosure or condemned?

I haven't heard of the law that DIY'ers can't fix up a house. Again, my mother has been looking at houses and in her price range, they all need SOME work but no one has mentioned that she or an unlicensed friend or family member can't do it. In fact, she's taking DBF to look at these 2 houses with her tomorrow when she comes up to see what exactly needs to be done.

Good luck

 

[EweSheep]

Not a HUD but a repo'ed by the bank....... Definately not condemned, thats for sure!

You CAN live in it, as long you don't use the furnance (because of cracked chamber) but we got a few months to fix it and hubby wants to use a licensed furnance guy to do it which Im OK with that one! And as for the DIY the roof and windows, we can do it in a short amount of time, of eight windows needing to replaced and roof done within a year. No leaks in ceilings at all. Inside is very good of a condition, needs painting and tear off old 70s wall papers LOL.