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

[BanginJimmy]

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]

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]

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]

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