Real Estate Investing

Buying a house for practically nothing seems to be all the rage these days.  I cruised through my MLS earlier finding foreclosed, bank-owned, and HUD-owned homes for a buyer.  I was absolutely shocked that probably 90 percent of the houses I saw were distress sales - I’m talking about homes valued under $120,000 in my market.  So the deals are easy to find, but there are things you’ll need to know:

1. If you’re in a hurry, stay away from short-sales.  There’s no guarantee that they’ll close in 30 to 45 days.  In some cases, it could take up to a year!  Short sales are perfect for peole who DON’T CARE how long it takes and for those who DON’T CARE if they have to walk away from the house.
2. If you buy something AS-IS, go ahead and hold on to your right to an inspection.  Make sure there are no major systems that need to be replaced - an surprise huge expense.
3. If an AS-IS home is on septic, get the septic inspected both for capacity and that it works.
4. Get the water tested if it’s not city water.  There are plenty of places out in the country that still have well water.  Don’t think for a second that e-coli or other contaminants can’t have gotten in if it’s covered.  You don’t want to spend your new home time in the bathroom - or hospital!
5. Be prepared to replace carpet, fixtures, and paint.
6. Be prepared to replace the broken heat/air unit.
7. Be prepared to buy a new roof, new windows.
8. Check the age of the home - if it’s older you may also be replacing the old plumbing pipes.

Buckle up and hold on because it could be a bumpy road.  It’s a road that you could maneuver but expect plenty of surprises. And maybe in the end, someone’s trash can be your castle.

In what appears to be a move not unlike the insurance “If you die, your house will be paid…” coverage, one real estate firm in Queensbury, New York is offering job loss protection insurance for home buyers interested in listings offered by the company.

Sellers of homes listed with RealtyUSA have the option of paying a one-time $500 fee toward insurance for the buyer. Should the buyer lose their job within two years of the closing, they can receive up to $1,800 a month for six months toward mortgage payments.

This is a BOLD move, but is being done in partnership with The Rainy Day Foundation, a group whose major focus is to provide tools to educate, counsel, support and financially assist homeowners who experience unforeseen short-term financial problems.

A friend of mine once suggested that if someone loses a job, the mortgage holder should allow an automatic waiver of payments for six months like students loans now provide.  It seems like this is akin to that suggestion, but I’ll be curious as to how well it will work.  To learn more, visit the company’s web site here.

Perhaps it’s the impending feeling of loss knowing my oldest daughter graduates from high school next month and will head to college in the Fall.  After that, we’ll only have four more years until the youngest also flies the coop.  The house already feels too big.  Too much to clean.  Too much yard to mow and trim.  Too much stuff.  High utility bills.

I’ve been thinking for some time about moving into a smaller home and a post that appeared in The Digerati Life really gives me reason to continue that thought trend. Living in a Small House: The Pros and Cons of of Downsizing Our House gives me the ammunition to bring the thought tickling my brain to full discussion mode at home.

The biggest pro:

The financials! Our mortgage payment on the smaller place is within a few dollars of the payment on the larger place — the difference is that it’s only a 15-year note as opposed to thirty, and we hope to have it paid off in five years or less. We are also looking forward to lower utility bills and upkeep costs.

But there are also cons.  This one really spoke to me since my mother-in-law also lives with us:

I no longer have a “buffer” — that space we’d like to preserve for ourselves while at home. When the spouse gets annoying (you know yours ticks you off from time to time, too), it’s harder to get away from him. Not only that, our large home had two stories, and the new place has only one floor. So stomping off in a huff loses some of its drama without the stairs.

I need my buffer zone (not that I’d ever stomp off in a huff - ha). Maybe I can find someone to trade homes with in a year or three.

Photo by Visulogic from Flickr Creative Commons.