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View Full Version : mo money' mo problems. financially smart/ investors chime-a cheap (monthly)residence?



Halfwit
09-22-2011, 10:07 PM
I WANT MY MONEY TO WORK FOR ME

So im in a dilemma. over the past 2 years ive saved up 40,000. That is cash, in the bank.

It is time to buy a home. (have to leave where im at in next few months)

my current plan: buy a house outright, get a roomate, and the money the roomate pays me will cover most of the bills, im out of pocket very little.

i cant work for another year (school full time and on unemployment) so i make enough now to cover bills and save a little (other savings came fom investing the money i had over and over until it grew)

after that year, i will have a degree in accounting (by may) and a degree in business management (next december) then i plan to get a job, starting anywhere i can to gain experience, but theoretically all the money i make can go towards savings as i have next no no bills.

but the problem with my plan is this:
houses in my price range (difficult but not impossible to find a decent 3br 2 b ranch) are a little further "in town" than id like (i like to be near interstates/stores/ ect) so ithink it may be hard to find a roomate if my residence isnt in prime area.

a house i pay 40k for will not be worth thatin a few years, and to obtain a nicer house (cash) would take more saving and a loss on current home.

question- any other ideas that would be beneficial to my cause? keeping in mind that:
1: my money will not grow as fast as it has, i can expect only to save 8k a year for the next year.
2: i have a foreclosure from 3 years ago, and no job so financing anything is impossible.
3: apartment w gf is a possibility, but that will cut out the plan of roomate paying bills and ill be out 500 ish a month splitting up bills.

take a look at #3 this may have a beam of light.
i get apmnt w gf, my bills each month are 500 instead of 100 (if i were to buy a home and only come out of pocket a little) but that would make my savings in the next year fall to 3k. BUT after i graduate with second degree (keep in mind i will have a degree in accounting and business management) i can get even a low level job at 10ish an hr and go back to saving for a year, and in a year from now, have 55,000+ and if foreclosures keep as they are, perhaps that will open up better housing opportunities than my current budget.

BUT: if im jsut throwing away 500$ a month, and having to live in an apartment, why wouldnt i just settle for a home thats a little further away from where id like, but it doesnt matter if i have a roomate or not bc id be out of pocket 500 a month anyway (utilities) but the opportunity for roomate would always be there unlike an apartment (strict on that stuff)

my only goal is to have a place to live that i can almost "live for free" so that my earnings can net me a return on my investment (meaning i have no bills so all earnings can go towards savings)

im open to ideas of a living arrangment where i can be out of pocket little each month, which i know is most peoples goal, but most people buy video games and wheels instead of saving their money. I told myself i have to buy a home before i can mess with cars, but at the rate of money i can save whenim in a home almost for free each month, cars will be easy,i can spend as much as i want and do it big if i please.

i swear if i won 1 million dollars it woul only stress me out.

BanginJimmy
09-22-2011, 10:36 PM
a house i pay 40k for will not be worth thatin a few years,

Unless you trash the place, it will be worth a lot more in 5-7 years than it is now. Prices are very low now because of inventory. In 5 years demand will have caught up with, and likely surpassed, inventory, therefore, prices will be higher.



and to obtain a nicer house (cash) would take more saving and a loss on current home.


Yes on the savings, no on the loss.



You have 40K in cash, you will be able to find a decent house for that money and you WILL turn a profit on it if you maintain it and improve it over the next 5 years. Unless the economy completely crashes that 40K house will be worth 60k or more in 5 years. If the economy does crash, that paid off house will be invaluable. You are in a win/win situation. The worst possible outcome is that you live in a paid off house longer than you really want to.

Halfwit
09-22-2011, 10:43 PM
Unless you trash the place, it will be worth a lot more in 5-7 years than it is now. Prices are very low now because of inventory. In 5 years demand will have caught up with, and likely surpassed, inventory, therefore, prices will be higher.



Yes on the savings, no on the loss.



You have 40K in cash, you will be able to find a decent house for that money and you WILL turn a profit on it if you maintain it and improve it over the next 5 years. Unless the economy completely crashes that 40K house will be worth 60k or more in 5 years. If the economy does crash, that paid off house will be invaluable. You are in a win/win situation. The worst possible outcome is that you live in a paid off house longer than you really want to.
same principal, if my home keeps its value or raises, so will all the other nicer homes, so ill still have to save up that much more along with selling current home to obtain a nicer one.

i was saying my 40k house turning into 30k house, and 70k houses turning into60k houses, so id spend 30k to upgrade.
but if my 40k house moves to a 50k hosue, the 70k house will have moved to an 80k hosue, so i still pay 30k to upgrade.

so the "gain" on my house wont mean anything bc that money goes straight towards another house, still with no financing available.

i do understand im i na win/win situation and "1 up" on many my age (23) but i jsut want to have another 40k by 25ish but then with that 40k id like to waste it on cars ect, but ill want to upgrade houses, and i jsut feel there isnt enough time for me to "have it all "(a nice house and ballin out on car) in my prime years (25-35)

BanginJimmy
09-22-2011, 11:02 PM
same principal, if my home keeps its value or raises, so will all the other nicer homes, so ill still have to save up that much more along with selling current home to obtain a nicer one.

i was saying my 40k house turning into 30k house, and 70k houses turning into60k houses, so id spend 30k to upgrade.
but if my 40k house moves to a 50k hosue, the 70k house will have moved to an 80k hosue, so i still pay 30k to upgrade.

so the "gain" on my house wont mean anything bc that money goes straight towards another house, still with no financing available.




This isnt necessarily true. Because you are buying a foreclosure, your house is going to see much quicker rate of increase than a non foreclosure. So that 40k house will be worth 70 in 5 years and that 80k house that you want later will be worth 100. Who says you have to sell that house when you look at another one though? How about renting it out for 800/month.

As far as financing goes, if you buy a 40k house now, stay there until that foreclosure comes off your credit report which is 7 years from the date the foreclose was finalized. Until then, you will see your score slowly creep up just so long as your keep current on everything else. You are obviously pretty good with money if you saved 40k. If you dont have any current credit accounts, go through your bank of credit union and open a secured credit card. Use that to start rebuilding your credit history.

bu villain
09-23-2011, 02:34 PM
Wow only 40k for a house. Wish prices were like that in an area I wanted to live in. Anyways, I'm not gonna crunch all the numbers for you but when buying a house make sure you account for all the costs:

closing costs
insurance
inspections
termite bond
maintenance costs
condition of home (HVAC, appliances, etc)
property taxes
utilities
HOA

These will eat away at your cost savings vs renting very quickly if you aren't careful. I would be surprised if you ended up saving much if anything over a $500/mo rental. A home is often a money sink, not an investment since it has become clear that you can't rely on appreciation anymore. If you really want to live in a house and have the money, I say go for it. Just make sure you go into with your eyes wide open.

I understand what you are saying about wanting to rent it out but just be careful. I currently rent out two rooms of my house but one of them has been a money loser for me. I am currently in the middle of the eviction process with that one. So just be very careful about who you rent to, assuming you can find tenents in the first place.

Good luck

silversol
09-23-2011, 06:38 PM
I am looking into alot of property myself. Most bank owned homes will not come with a discloser letter or a termite letter. Also plan on spending a good amount of money right out of the gate. Most of the time the carpet is ripped out of the house and more often then not its missing appliances. Also you dont know the condtion of the plumbing or the a/c the big ticket items!

2turbo4u
09-25-2011, 09:10 AM
How about rent to own? Also is the girlfriend contributing to any of this?

98blackcivic
09-26-2011, 02:44 PM
man i would just live simple and as cheap as possible.

josh42191
10-08-2011, 08:36 PM
pm me and i'll show you how to turn that 40k into double within a month span of time. It's all about how motivated you are and how hard you'r willing to go to get it. ITS REALLY SIMPLE/LEGAL btw

Humphrizzle
10-08-2011, 11:08 PM
just got a house in fairburn for 44k.. it's nice as shit and i have 2 roommates paying all my bills.

Jeff
11-04-2011, 08:02 PM
rent to own = horrible idea...

I am also about to start buying some foreclosures, but turning this into section 8 properties. but im looking at more like a 20k house 3 bed which would make my mortage and insurance about 150 a month and turning it into section 8 property renting for about 800+

Julio
11-05-2011, 09:59 PM
Renting houses on section 8 that pay 800 a month ? Lol.

Good luck with the investment. Buying foreclosed homes is a risk, but, any investment is a risk.

Jeff
11-06-2011, 12:23 PM
i have worked in leasing and seen section 8 1 bedroom vouchers for over $1400 you would be surprised how much they are stealing your tax money, might as well get it back.

Jeff
11-06-2011, 12:24 PM
how would buying a foreclosed home be a risk? its actually a good deal, as long as you know the area, get the home inspected well, and have the cash to do the necessary fixes.

TIGERJC
12-11-2011, 09:24 AM
how would buying a foreclosed home be a risk? its actually a good deal, as long as you know the area, get the home inspected well, and have the cash to do the necessary fixes.

Good luck. With government looking to cut cost, section 8 program will probably see a reduction in their budget over the coming years. Renting period is the way to go in real estate now because of the credit crunch. My uncle has section 8 properties in Macon and SW Atlanta and all I can say you better have the capital to maintain and fix the property because of the high turnover rate and wear tear that comes with dealing with some section 8 tenants.