Hi all,
I was wandering if anyone ever bought a distressed property for a personal residence? I am looking to buy my first home and I want to look into something that I can add value. All my family is in the trades so I can have the work done super cheap. Also I hear you can’t use an FHA loan for a short sale, is this true?
Any advice is appreciated…
The house i live in now was an Reo. Its a great way to make tax free money after two years, but moving over and over doesnt appeal to my wife. If i wasnt married it would be easier. And it can take a long time for something at the right price and place if your picky to come along.
John,
what kind of loan did you use for the purchase?
I did the same 18 months ago. REO in need of help. I put 20% down and paid cash for the fixes I couldnt do myself. I will be selling or moving out to rent in march 2013. Capitol gains ends march 2012. First time home buyer ends March 2013. I should pull 50% of the sales price out in equity or cash flow $300 per month easy.
It was a conventional loan from wells fargo.
oh I see, Only problem with a conventional loan is that I would have to come up with 20% down which is more than I have. I know I can qualify for an FHA loan and bring about 3% down. My goal is to keep it for about 5 years, add the value and then upgrade from there. The only problem is that my realtor tell me that with FHA Financing they usually don’t finance fixer uppers.
Well I think Wells Fargo has a program for 5% down.
I purchased a 4 unit property with an FHA 203K loan 3 years ago. It was a short sale.
JP
JP,
You say that you purchased an investment property with an FHA loan?
How was your eperience with it. Was the property in top shape? my realtor says that if the property needs repairs than the bank wont approve the loan. I was told it needs to be move in ready for an FHA loan.
The property I am currently living in was a distressed property when I bought it 13 years ago. I just didn’t know it at the time.
Yes I did. I purchased a property with an FHA 203K loan. The 203K loan allows you to borrow the rehab money as well. I am going to send you a PM. Check your inbox.
JP
Yep. I live in it now, and I paid $53k less than what the previous owner paid for it two years prior…which in Texas is a lot of $$$ off a house. LOL! New carpet + new paint + new lighting fixtures, at the seller’s cost albeit, and the place looked/looks brand new.
I bought the house I live in as a flip gone wrong. I got a 5,000 sqft house in the estate homes section of the neighborhood I was living in. I saw the house a few years back because it was for sale for such a low price. I found out that it had been built by the original owners but they only stayed in it 2 or 3 months. The house was then sold to investors that watched those flip this house TV show. She went in and did a lot of upgrading to the house and then it sat and it sat and it sat. 2 years later I bought it from her for what she paid for it. The only thing I did was put in a pool, and customize the home theater.
That is one of the reasons I say flipping does not work.
Nando,
I was in your same shoes about two years ago. My wifey and I purchased an REO property, I am still doing repairs here and there and it’s really a matter of if your wife is “cool” with it. I say this because often times women want their house to be pretty.
I am now fixing whenever I have the money and time to do the repairs. Just last week my father was able to help me by opening up a wall and doing a bar type opening that overlooks the living room from the kitchen.
All in all, if you have the money, a great wife, and the right family to help with your repairs. Go for it!
I purchased a duplex a year and a halff ago with FHA and 3.5% down. I am moderately irritated that I cannt get rid of the PMI until after a five year seasoning even if I now ay it down to 80% LTV. It was in fairly good shape for a rental, although it’s hurt my profit margin the first and this year fixing it up. The carpet was in poor condition when I purchased it, and I replaced both at the same time when the tenant and myself moved out at the same time. that hurt a little! I then had to paint both sides at the same time, and that hurt too. This month I’m doing the tile upstairs. It was installed improperly and needs torn up - that’s four bathrooms.
All in all, it was good enough condition to rent out for a year and live in on my side without significant repairs to get it rented. I think that would be a requirement for FHA.
My current house was a foreclosure too. It had mold in the basement. I elected to go with a local bank that required 20% down and I’m paying a higher interest rate too because I wanted more flexibility with underwriting. It worked out well. We had to paint and put new flooring in it, and clean the mold out of the basement but had it move in ready in two weeks. I plan to live here until early 2015 when we’ll have the “dream” home built and be moved into it out in the country. I plan to profit 30k when I sell this place, and have significant equity in it at that time. The plan is to be around 50% LTV when we sell to pay down the loan on the new place.