First Time Buyers Category
New MLS Search puts You in control
Consider a Duplex for 1st Home
As a first time buyer starting your home search you are probably considering the type of home, features, location, etc. that you would like to purchase. One type of home you may have overlooked is a duplex,triplex or fourplex. For many first time buyers this is an option that really works out well.
I can tell you from personal experience that buying an income property as your primary residence might be the best decision you could make. I know, I did it. A number of years ago I was between homes and renting. A single Dad at the time, my Son and I lived comfortably enough in a rental condo, that it is until it was put up for sale. So, we moved to another rental house and guess what? It went on the market about 6 later! Once again we were moving. It was apparent by that time that renting did not give me the stability and control of my situation that I preferred so I started looking at home purchase opportunities. Trouble was, the projected payments were so much more than the I rent I had been paying I was going to have to make some serious budget choices. In fact, without raiding my 401k it was borderline impossible. I started considering alternative plans. Keep renting? I knew long term buying was my best choice but how? It was then that I came up a plan to have a renter help with the mortgage. I did not however want a roommate. Solution? I bought a duplex. The cost was about the same as a single family home but with the rent I collected my expenses were basically the same as when I was a renter. Since it was my primary residence it qualified for FHA financing and I purchased with just 3% down payment. Not much more than a security deposit and last month rent. Because a duplex is very easy to convert from a primary residence to an income property there is no need to sell when you decide to purchase a single family home in the future.
We have done just that. Sandee and I still own our duplex and it more then pays for itself while it increases in equity and ultimately will provide income during our retirement.
The same thing can’t be said for the house most people live in. Sure, years from now you could downsize but unless you have moved through a series of price ranges to an expensive home will that really provide significant income? Probably not. I think most people are going to have developed a certain expectation of lifestyle by that time and not likely to move back in to a starter home.
Being a landlord is not for everyone of course but we have found it to be rather rewarding both financially and personally. We have tenants that we really enjoy and by making sure to carefully screen before renting we have so far avoided the nightmares that some landlords have experienced.
At this time there are quite a few income properties for sale in Shasta County. Many of them are priced below single family home prices and are definitely worth consideration to any first time buyer interested in developing long term wealth.
Just in case you missed it- DAP’s the Word
Rent vs Buy, the True Cost to You
| Loan Amount | Rate | Annual Interest | Annual Prop Tax | Tax Deductible | Tax Rate | Tax | Monthly Savings | |||||||
| based on1.25% | ||||||||||||||
| $200,000.00 | 6.25% | $12,500.00 | $2,500.00 | $15,000.00 | 20.00% | $3,000.00 | $250.00 |
The Truth about REO’s and Repairs
Racing Under a Yellow Flag
The Credit Crunch and The First Time Buyer
- Pay your bills on time. As this can count for one third of your credit score it is very important that you avoid late payments. Payments that are 60 days late will be reflected in your credit history and lower your score.
- Avoid opening new credit. That 15% discount offered if you apply for a card at your local retailer may cost you a bundle. Too many inquiries and too much available credit can have a negative impact on your credit score.
- Keep older credit lines open. Accounts with a long history tell lenders that you are a good credit risk. Use them regularly and pay in full each month.
- Use Credit Responsibly. Keeping a few active credit lines open with timely payments will go a long way to boost your score.
- Reduce your balances. For many this will be the biggest challenge. Avoid making just the minimum payment on your credit cards. It is critical that you work towards getting your cards payed down to no more than 20% of available credit. This may take some time but with discipline and planning will pay big rewards. Not only is a full one third of your credit score determined by this factor if you are making only the minimum payment you are losing incredible amounts of money that could be saved for a down payment.
Beware the New Roof!
In order to sell at the highest possible price and to avoid problems in escrow Sellers often repair or replace obvious defects on homes prior to listing the property for sale. In most cases this is good for everyone involved. The Seller has an attractive home to market and the buyer has a “move in ready” home with no big ticket items needed after closing escrow. A “win-win” right? Not always.
Beware the new roof! Roofing, if installed incorrectly, can lead to big problems when wet weather or winds come around. Homeowner installed roofing may look good but unless they know what they are doing is definitely skin deep beauty. Shingles improperly spaced or incorrectly weaved are bound to fail. Most likely this will happen at 2 A.M. on a weekend during a monsoon. Until you have seen water pouring out of the ceiling at a light fixture you can’t really appreciate how much damage this can cause.
If the house you are thinking of buying has a new roof ask to see the building permit and professional installation invoice. If the seller can’t supply both it is critical that you get a professional to inspect the work. This is not at all uncommon. In the last year alone we have discovered three “new” roofs that needed either repair or replacement.
Sphere: Related ContentBuying REO’s, a Happy Story
Why do we Love Our Job? Well, there are lot’s of reasons actually. When Sandee and I decided a number of years ago to “put both feet in the water” and concentrate exclusively on Real Estate we knew we would be walking away from guaranteed paychecks, 401k’s, medical insurance and all the other securities that we had built up and embark on a totally new journey. In hindsight it is one of the best decisions we have ever made. One look at the smiles on Mike and Iva Deane’s faces should tell you everything you need to know!
Mike and Iva Deane were blessed with great timing and we were blessed with the opportunity to play a part in their story. Recently they were featured in an article by David Benda and Andreas Fuhrmann published on the front page of the Record Searchlight titled ” Bargains Lift Home Sales”. The icing on this cake? The same day Mike closed escrow on his new house we put his old house in escrow!
Is it any wonder we love our jobs? We get to be a part of this experience over and over! If you are ready to take advantage of the opportunities that this market presents please Contact Us. We would Love to hear from you!
Sphere: Related ContentShould You be Scared?
What does this sign mean to you?
Well, it largely depends on your perspective. If you are an owner who is selling under duress this sign might look pretty gloomy. If the sign is hanging on the house next door to yours it may cause you concern. If you read the paper or watch the news you are being inundated with articles and story’s on foreclosures and the poor housing market and this sign might scare you.
But if you don’t own a home what does it mean to you? The truth is this sign should look great to you. This sign should look like the 30% off clearance sale sign at the department store. In Shasta County as in all parts of California houses are selling way below retail. When home prices are discounted like this guess what? So are house payments. Right now savvy buyers are picking up homes with fixed rate payments close to 2003 levels.
When will it end? There are signs that foreclosures by lending institutions may be leveling off.
This from DataQuick;
“The small increase in defaults from the first to the second quarter may indicate that we’re nearing a plateau. We won’t know until the end of the year, but it may be that some lenders are starting to prioritize workouts with homeowners instead of grinding things through the foreclosure process.”
If that is the case then we could be very near that holy grail of all bargain shoppers “The Bottom of the Market”. When that happens prices should start moving back up on our next market cycle. And how that looks to you is largely a matter of perspective.
Sphere: Related Content
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