Newbie Says: I Want To FSBO My Current House So I Can Get Into A Better House/neighborhood...Advise
ANYONE....Please advise...
Current house:
Market value: 85-105
Currently owe: 82 @ 5.38%
Current pmt: 468 P/I
House is in a decent neighborhood, but it is just two blocks from the barrio (borderline war zone). I've been broken into once, and the neighbors just got broken into last week.
I want to get into a better neighborhood, and I want to maximize my situation investmentwise. I've been studying RE for about six months, I have excellent credit (~700) and I make 60k at my current job.
I feel confident that I could FSBO for 95k with 3k down and 900/mo., but being a newbie, I have concerns on how to structure (deed transfer, should I handle paying the taxes and Ins., what if my buyer falls behind on the payments and I have to foreclose or something, should I keep myself as the beneficiary of the H/O ins., etc.), Am I being too paranoid?
Also, If I keep the mortgage in my name, what repercussions will that have on my ability to get another mortgage for my new house?
I'm sure it will behoove me to go ahead and setup a relationship with a RE attorney, he will be able to steer me, however, I would like any input I can get here also.
Thanx to all in advance
Why not just lease/option it. That way you keep control of the property until they excercise the option.
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Because then I am responsible for repairs right?
Not if you write the contract correctly. I have the lessor pay the first 1k of any repairs. Even though it is not really their house until they excercise the option I always tell them that "this is your house" and that they need to make all minor repairs. Just write it in the contract.
It sounds like it will give you a positve cash flow, and your credit can support the property and another.
Just a thought .
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Thanks Bill!
I think you have to determine what you want. 1) Do you want to SELL your current house and buy a new house or 2)Lease/rent your house as an investment property and purchasing a new one?
If it is option #1 ownership and responsibility is no longer yours after closing. If it is option #2 then ownership and ultimate responsibility is yours on that house along with your new house.
Define for yourself what your objectives are. Do you want a bigger house for you and your family? Do you want to downsize, save on monthly payments and take your equity and monthly savings and invest it into real estate? How frugally do you want to live? How much money do you want to free up?
Don't make any hasting decisions but if it were me and the "war zone" is two blocks away and I could sell my house I'd do it in a heart beat. There is plenty of good real estate to own in "non war zone" areas.
Good luck,
Q
Hmmm...food for thought...Thanx Q!
Hey Chuck...
You mentioned the numbers of:
Market value: 85-105
Currently owe: 82 @ 5.38%
Current pmt: 468 P/I
What if you moved out of that property and it took you 2-3 months to sell. You will have 2-3 months of mortgage payments plus upkeep and not to mention possible vandals tearing up the place. I would lease it out and in a year or two (hopefully values will rise, you can make more on the sale) plus, if you lease it out you can make money up front, during the lease and at the end when you sell.
If your property comes in at $90k you will have closing cost plus payments and whatever else. That could eat into your equity.
Just my opinion....
My goal is to move to a better house, and either FSBO, or LO this one to make extra money. I don't care about cashing out as long as have a + cash flow. I wouldn't move out 'til I found either a LO tenant with 3k down, or a unqual buyer with 3k down. whether I leased or sold, it would take the same amount of time to move it right?
From an above post, it sounds like the LO deal is better for me as long as I have the repair stip in the contract.
Sometimes lease is faster than a sale. With a lease you can run an ad that states:
Lease-to-own
No Bank Qualifying
3br/2bth
It's up to you if you want to do a credit check. If credit doesn't matter add that in your ad. You don't have to use the exact wording. You can say rent-to-own if you'd like. You can add the down payment in your ad or you can leave it out. If you leave it out and someone calls and ask how much down, just tell them it's negotiable and ask them how much do they have to put down. You may get more down than you wanted.
If you can structure the deal a nfew different ways. You can ask for more down with less per/month for rent or you can ask for a less down with more www.per.month for rent.
Just some pointers....
Yes...Thank you!
Nobody has mentioned some things which needs to seriously be considered.
A $20K range on market value is too much. This needs to be much closer, and make sure that it's an honest estimate of value and not just hopeful thinking.
If the property is only 2 blocks from a warzone, and the neighborhood is prone to breakends, I'd go to the low side of FMV, and I'd definitely consider a quick, outright sell instead of owner financing. Chances are fair to good that market values won't increase and might decrease, possibly greatly, if the warzone expands.
Roger
Raj has a great point.
At 90k fmv, you are looking at eating up most of your equity in fee's and commission wich would be a break-even for NOT being in the "war-zone".
But if the "war-zone" expands into your area of ONLY 2 blocks then you could be looking at taking a LOSS in the future if you tried to sell.
Think about if the neighborhood continues to decline how hard it might be to lease the place to decent folks. Do you really want to have to come and collect rent from the people you might have to settle with dealing with.
Get out now and start over!!
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