Need some help with real estate, who is edumacated?

[Nexus1155]

Ok, sooo I am broke and honestly can't think of what i want to do with my future and i need something to atleast have a secure foundation on. I have a 710 as a credit score, and even bums less fortunate than me can afford a damn house... but im just looking at this as an investment property.

The house
$200,000

3 Family, 9 rooms, 2 bathrooms(makes no sense! guess the 3rd floor doesn't have to poop)

The house is in a crap area, but is down a dead end side street which no one goes down... Mortgage is roughly $1100 per month.

I want to charge $1000+ per rent depending on the area its in(need to research) so that leaves me with an extra 1500+ a month profit.

With the area that it is in i might have to hassle to get paid for the rent. Does anyone know how i can turn it into a Section 8 Housing unit so i get paid by the government instead. Or if anyone just has any general ideas

Thanks Everyone!!!

[firemachine69]

You won't get the mortgage. End of discussion.

Unless you forgot to tell us about the 40K you have sitting in your bank account...

[Nexus1155]

with a cosigner?

[Bob_VT]

30 Year mortgage @ 5,5% w/no money down is $1135/month

Add in taxes, utilities, repairs, insurance ........... you need to keep 2 units rented at $900/month just to break even and it would be close. You will probably have to live in the 3rd unit to make it work. If you live in the 3rd unit and keep it working for a few years then you can move out and move on.

Keep this in mind..... what is the cost of a furnace or boiler..... roof replacement ..... these are things that will bite you in the ass. If you can not get a renter @ 900 would you settle for 650? When the renter gets laid off or fired..... and can't pay the rent.

Being a landlord can be both risky and rewarding..... do a bit more research. If it is a legal aptartment house you are entitled as the buyer to know it's rental history. You would want to get a professional inspection too.

[firemachine69]

with a cosigner?

Does your co-signer have about 40% of assets sitting around? I.E. their own house paid in full, stock options, bonds, etc?

[Nexus1155]

I'm 21 and still live with my parents and am planning to open a shop in the future, im just looking for some added income.

Half of my family are contractors and my dad does HVAC work, If i ever needed anything done i think i am covered at cost....

I think i might outsource the landlording to a secondary company as that seems to be the smarter thing to do nowadays.

lol firemachine do you not live in the land of dreams i do.....Boston.

[Bob_VT]

I'm 21 and still live with my parents and am planning to open a shop in the future, im just looking for some added income.

Half of my family are contractors and my dad does HVAC work, If i ever needed anything done i think i am covered at cost....

I think i might outsource the landlording to a secondary company as that seems to be the smarter thing to do nowadays.

lol firemachine do you not live in the land of dreams i do.....Boston.

Outsourced companies get 10-15% of the rent collected plus charge for repairs. That could be a real bad idea and cost you more than you think.

Want to buy at that young age and you will need a downpayment. Start small and just consider a single family when you budget yourself.

[Nexus1155]

ahhh, i thought it would only be so much a month and not a % wise, hmmm yeah i guess ill have to rethink that.

As of being this age, being in college, i currently own my own auto business, and am also a co-owner of a tanning salon... it's just that most of the money goes back into the businesses smartly, and not to me... So i consider it an investment into my future...

The funny thing around here, is that i might end up paying the same if not more for a single family. This one caught my eye, in a decent/crappy neighborhood, but on a dead end so its somewhat safe, i thought id atleast check it out and see if it has anything going for it...

[dvlnblkdrs]

if you want to become section8, i recommend looking at hud.gov thats the govmt housing website.. my mom works in mortgages, quality control for a mortgage company(csi, loan style.. lol) she works directly with hud as well in reviewing their loans.. im sure theres something on their site about how to become section8.. i know theres specific requirements...

[putt_putt]

You won't get the mortgage. End of discussion.

Unless you forgot to tell us about the 40K you have sitting in your bank account...

youre a fucking prick. id get that dildo out thats shoved up your ass.

[dvlnblkdrs]

putt.. he was correct.. may have said it bad, but accurate nonetheless

[jkuchta]

I too think getting a mortgage at his age with little (or nothing) down will be pretty much impossible. The cosigner might help, but you're still going to need 10-20% (minimum) cash for a down payment, around 4-6 months worth of payments sitting in a bank account (for at least the last 3-6 months), as well as enough of a credit history. No Doc loans don't exist anymore.

The credit score is good, though I'm not sure he's had enough of a credit history to qualify for a home mortgage.

He might qualify for First-Time-home-buyer loan perks through the FHA, though I'm pretty sure he will still need to live in the home to qualify.

I say give it a shot. Nothing ventured...nothing gained!

My wife and I are in the process of researching areas in which to buy our first home, and all I can say right now is that I'm glad home prices are tumbling here in So Cal! The cash-in-hand needed to buy a home is pretty daunting.

[Bob_VT]

http://www.fha.com/calculator_afford.cfm

Remember since this is a first mortgage you may be required to pay mortgage insurance too......

keep in mind in your first line you said you were broke....

[Nexus1155]

Thanks for the responces, i will check out the hud, the only reason i am opting for this location is because it is somewhere local to me and i will be able to monitor it.

with section 8 kind of gives me some backup in terms of rent from the government, even if they do get laid off...

i've heard of places giving out mortgages for some time on easy standards just to watch you fail, or based on many reasons, but you are right nothing ventured nothing gained, the key is to shop shop shop...

But yeah, even though the economy wasn't in such a scare as it was, the market is still crap in some areas....I wish you luck with your search as well!

i just tried to do the calculator, and it said i needed to make 60299 a year for a 30 year mortgage on 200k with a 4000 anual tax amount which seems a little obsurd... anyways, im not that broke, but borderline... i always have some things to back me up...which i think would allow me to get some kind of mortgage, maybe a 10/1 arm in case they thing the economy will get better then...but i will be putting more in to pay of interest on top of payments so i do not get raped bad

[dvlnblkdrs]

thank the govmt for those.. the gov told mortgage companies that 80% americans needed to be homeowners within 10 yrs and to do whatever needed to make it happen.. so came sub prime and stated/stated.... just fyi

[TLyttle]

Lots of problems there... Renters are a real crapshoot: if you are lucky enough to get a good one, consistently pays the rent, looks after the place, you would be one of the lucky few. Otherwise, you could get bit to a point where you wouldn't ever get out, and someone lives for virtually free in YOUR house.

Don't think so big; start small (like your income), and try to be in debt to no one. If you have two businesses now, and are "virtually" broke, you best check your spending habits. You have some interesting backup, but ten times nothing is still... nothing...

[Nexus1155]

http://boston.craigslist.org/rea/ anyone can be my guest lol

I've found some places that are condos, but i dont think you can rent a condo after purchasing it, it kind of defeats the purpose and i would be tempted to live in it... And yeah i see where you are coming from, most renters don't know how to manage their money and thats why they rent to begin with!

but yeah im virtually broke from when i was younger and like all people misused their..... third credit card?... first and second were still in check good, but the third one went overboard somehow, and i didnt feel like using a card to pay a card...I like stuff :(

[Nexus1155]

UPDATE:

So i went by to check out the house today, its borderline good/bad neighborhood being about a mile away(but this seemed like a safe little street). The house in the pictures was not what they advertised and can use some work, in which i will offer them a much lower value than what is expected from that unit...

I attempted to send the realtor an e-mail in hopes of a responce, but i doubt i will get one....so i will just have to call in a day or two...

Didn't get to go in, but the visual issues are... Disgraceful yard, boarded up busted windows, theres a police notice sign in a coupld of places, part of the vinyl siding is ripped off on the second floor. Pet peeve was that the fence surrounding the house that the companies own are totally mangled...if i ever do buy this property, i would need to fence the whole house in, or have them do something about their property...if i can get this place for $125K i would be content..

I live close by and was looking for an investment property, so i took a ride down to see the house. I am interested in it, but there are a couple of questions I do need to ask.

Is it a 3 unit place, or a 2 unit because there are 3 mailboxes, yet a few listings only say 2 liveable units.

Also, the house looks condemned, is it up to code on everything or did someone just bust up the windows after the fact and labeled it as such?

And just wondering if any offers have been made so far. I would be interested to see the house sometime in the daytime. Being of the young age that I am, I even don't want to be hanging around there at night time.

Thanks for taking the time to read this message, and could you please include any more information you have about the house in terms of HVAC/Plumbing/Electrical,lead,asbestos etc.

Sincerely
Nicholas Goyuk

[Return of the Yarii]

Not really the governments fault, mortgage companies did not need to charge a variable rate! Fixed rate is all there should be. Also the government did believe in deregulation which might not have been the smartest thing and contributed but certainly not the cause. Mortgage companies have people that check risk of the loans and they new that those people would more than likely not be able to pay when there rates went up, but the only thing they saw were the dollar signs and there business swelling from all the loans they could get and exorbitant fees they charged. I must add that there were shareholders to keep happy also. Then came the huge bonuses and then rates went up and people could not afford and lost there home to foreclosure.

Then the assholes did not want to work with people to help fix the problem and the government rewarded the mortgage company and bailed them out but not the people who's houses were getting foreclosed on.

In my opinion those banks should have went belly up with no bail out help at all and the people in charge should get some prison time and have there assets seized and taken. Obviously the nation would be in a little bit worse shape at this point but there has been no lesson taught, the only thing they learned was that they can fuck the system and then get bought out by the government and then still get there millions in bonuses courteous of the taxpayers. Who I should mention are still not getting help with their mortgages.

This is only true to a point, yes I agree banks are partially to blame and the government less to blame but everyone is missing the one party that is most to blame....its the consumer. Too many people these days are "house poor" barely affording their mortgage on their home and living paycheck to paycheck. I dont buy for a minute that all the people out their w/1, 3 or even 5 year ARM's didnt know what they were getting into. They knew the possibilty that their mortgage might go up but didnt care and now that they cant pay their unfortunate situation needs to be visited on the 90% of people that can afford their house? Its like the car thing, I have many friends who have 50k+ cars, all leased and paying upwards of 500-700 per month to say they drive a nice car.....funny thing is they dont have anything to speak of other than the car which isnt even theirs to begin with.

The OP with no disrespect lends into this whole situation...here is a 21 year by his own admission lives w/parents, more than likely no credit history to speak of and no solid income stream and yet he/she thinks its wise to buy a multi family house? I also agree w/the person who said No Doc mortgages are gone but even though when they were around you needed to put down 30-40% as there was always an assumed higher risk since you cant verify your income. Finally I agree w/some of the others that its going to be near impossible to find a company to finance the OP so I would recommend less house shopping and start shopping for a mortgage. General rule of thumb in the mortgage industry is you can generally get approved for 3x your annual salary i.e. annual salary 50k = 150k loan amount.

[dvlnblkdrs]

well , the government rules relaxed during this time.. so when there are less guidelines, more likely to loan money to people...


if guideline states you need 50k in assets to qualify for a 200k loan, and before it was 100k... if u have 50k.. u got the loan...

and most of these loans were stated income.. in otherwords NOT VERIFIED and assumed was truth.. and the people who originate the loan for those tended to boost the amount up in order to make it work.

so it is not always the mortgage companies fault... i worked in the same mortgage company as my mom for 3 years as an all around assistant, so i saw a bit of everything...

[ChinoCharles]

The truth is you're both right. You're all right. Everyone messed up.

Part of this is that a lot of people are completely and totally ill-prepared when going in to buy a house. You need money and you need to know what you're getting yourself into... not just one or the other. Banks need to take some blame too, though. As we now know, their mistakes tend to cost us taxpayers a lot of f#cking money.

And anyway, if you don't have 20% down to put on a house in this market why are you even considering doing this? Do you know how much prettier your annual rates are going to look with that down payment? You'll save thousands of dollars.

[Nexus1155]

I know what everyone is saying, i also hear that it will be expensive, i know there are programs that allow me to pay off my principal and interest at the same time, thats why i am opting for something cheap in my area, pay off $1000 to the mortgage and $500 to the interest on every payment...

And honestly, i will never be able to save for a down payment of $40,000 until i am 28 and i will still be living with my parents at that time, what a loser(no offense to those who do...)

In all honesty, i do not want to live in an apartment and rent, its just stupid and its basically throwing money away...lots of money... maybe a condo that i can rent to own but thats besides the point.

And i do have a credit history which goes back 5 years and i've bought one car and helped to buy a second...and theyre both paid off already...

If the bank does give me a loan, that is a risk on their behalf. If i lose, they end up making more money unless I file for bankruptcy, which i obviously cannot do or i will be screwed and they will most likely see it as that and i will be locked into payments forever...so they win..

Sorry for the run ons....

personally if you want to know my income you can message me see how it fluctuates from very good to very bad on occasion(700 one month,5000 the next) but id rather not divulge others fully into my business on a public forum

[dvlnblkdrs]

camell..

first of all.. as far as gen pop..COMMON SENSE IS NOT ALL THAT COMMON!! believe it or not!

and as far as the loan contracts.. PEOPLE DONT READ 90% of it if any at all! by the rep not explaining to them what a variable apr is(since some people dont know and most people dont think to read into the loan program they are getting into) they get their commission and the people get their homes..

and idk about where you live, but where i live, its quite common to see someone living at home with family or in a really crappy apartment, but driving a luxury car.. all about image.. i cant tell you how many loans i had seen just in processing stuff where someone had 500-1k for a car note! you would be surprised at the amount of fraud people tried to get away with.. people like to live beyond their means sometimes.. big eyes small wallet=bad credit sometimes though...

if people are going to be ignorant about something so important as their credit and if they can even live in the home they are buying and not reading contracts and such.. why shouldnt someone take advantage? i cant tell you how much money the loan reps were making 5yrs ago.. lets just say they were all in 5-6 figs a lot of time.. that says something HUGE!!!!

[firemachine69]

I agree with you return of th yarii to a point, but the people that run the financial industry in this country are supposed to be, we will say more intelligent than the average consumer and they should not have loaned the money to these people that they knew would not be able to afford them when the arm increases started. Then they refused to help out!

They should have know this by the loan application and looking at there debt to income ratio as well as net worth. I do believe that the consumer should have a real idea about what they can afford and what they cannot afford and those people lending them the money (who should be smarter and have an interest in keeping their company afloat and share holders happy) should have given them this information, the correct information, not the if you can sign we will lend information, when they applied for their loans.

I think a lot of lenders misrepresented the way the loans worked to people that were of less intelligence than them. This simple fact coupled with the overly inflated prices in the housing market and credit card debt the average American carries bit them in the ass and now everyone is paying for it. The whole world financially is in a state of distress because of this.

If they would have allowed these people to stay in there homes and worked with them to reduce payments or something this problem might not have gotten so bad. The consumers do bare some fault as a lot of Americans live above their means to keep up with the Joneses or what have you, but the main blame lies with the people who should have been the wiser and denied these loans, but no they seen there profits swell along with their bonuses and it all collapsed. They lied to the consumers they lied to their investors and shareholders shit they even went on TV and said everything was okay then 5 days later they are talking about bankruptcy! They are no different than the people who ran enron! Put them in jail, seize and freeze their assets and put them and their families in the same boat with everyone they screwed over. They never should have been deregulated.

See what essentially happened was a loosening of the rules to allow idiots with mortgages they could not afford when the rates went up. They used an idealistic figure of person not using more than 40% of their net income to pay debtors (and remember, EVERYTHING - cellular phone, insurance, etc.- count), and an extra 20% in liquid savings. Of course, as many know, this has effectively zero correlation with the real world. I'm about 5% below the maximum, and I live with my mother (paying rent, but still). The mortgage companies ran with it, figuring a safe "new" debt-level figure was 60% - perfectly suitable in a social communist world where we all let someone else take care of our problems. Of course, the added 20% load was used up by just about everyone a long time ago, and the safety net that the savings "invested" into the home equity vanished overnight. As we all know, we saw the house of cards come crumbling down afterwards...

I'm positive some of them said it was likely a bad idea, and told the government and "higher ups" this could only end in disaster, but people are greedy and believe "that each kid and pet needs their own bedroom", not to mention four bathrooms in the house.


Nexxus:

I read ya dude. I started a company, and had HUGE fluctuations of income. Sadly, the bank's want to see:

A) large cash reserves for the slower times
B) a near-bulletproof plan
C) equity (existing buildings, etc.)

I tried to do what you are thinking about starting in the good economic times, and it didn't turn out all too good for me.

P.S. a twelve page business plan is not enough. :wink:


Sometimes, some people just will never be able to manage and budget for things going wrong, and those are the perfect candidates for renting.

[dvlnblkdrs]

it all would have worked out fine if not for the giant inflation that happened.. that made everything worsen so much more.. it worked just fine before a 100k shack in compton began selling for 500k