I need help getting started

[Tayman]

Well here is a little background information about my current problem.

I need to move out of my current residence(apt) by November 31st.  I have been reading, reading, and reading some more about investing in real estate, and I feel that I would be better off buying a home for myself before I start investing.

My credit rating isn't the best because of an unresolved charge-off for a credit card(long story).  

I am currently working with a mortgage broker that has already qualified me for a loan(100k), but most of the homes I find are out of my price range(Houston,Tx).  I am under the assumption that most realtors only get their listings from MLS.  Where else should I look to find a decent deal with my current situation(lack of large amounts of cash)?


On a sidenote...

I found a home, but the maintenance is $200 per month.   :eyes    Is there anything I can do to lower that payment?  I am under the assumption that the association in the area sets the price...but why would it be so expensive?

[Eric C]

Hi Tayman -

I was taught that your personal residence is a toy; not unlike other large ticket items - its there for your convenience (and pleasure) rather than for investment.

Over the years, John Q. Public has been convinced that their personal home is a great investment and sometimes, its even turned out to be true. But that's sort of an accident and not the result of planning. And even then, not everyone participates in that investment miracle -- if you purchased something in the wrong part of town, wrong State, wrong property type (can you spell "condo"?) you didn't get to cash in with everyone else.

Times have changed a bit and it's far easier to get financed now (for a personal residence, anyway) than its ever been. And the tax law changes that were written into law during the late '90s makes home ownership even more desirable --after all, who wouldn't want to take advantage of all that tax free profit?

Even so, for most people (this does not include experienced RE investors) its probably a good idea not to combine investment property with your personal residence.  Understand, there are exceptions.

Here's the deal: Were I in your shoes I would want to make very sure of my goal.

Do I want a home? Or do I want to begin an investment career?

If you're really trying to learn the RE game -- then find a place to rent for awhile. Rents almost always lag home prices and in most cases, if you really look , you can find some real bargains.

Save your money for real deals.

Or, if all I want is a home, then by all means go for it. But I'd stay away from those condos if I were you.  They never appreciate as well as SFHs and some associations can be a real pain later down the road.

Take care,

Eric C

[Tayman]

Thanks for the long reply.

I have decided to skip that property.  I found out that the HOA(home owners association) will raise the fee to 220/month....

No thanks...

In the process, I found another property(home) that I will try to close on asap.  

I no longer want to waste money renting apts/homes.  The monthly payment for this house will be the same as an apt.  

Once I get this taken care of, I will begin the long journey ahead of me.

[Shawn M. Audlin]

Tayman,

If you haven't already considered this why not look at duplexs-fourplexs.  They wouls still be residentail loans, you would be owner occupying one of them, and the income from the other unit(s) would be considered additional income for qualifying.  This way you get a home, and jump start your investing career all at once.  

Win/Win investing to you, Shawn

[Tayman]

I like the idea about the duplexs/fourplexes, but I have an immediate problem to solve first.

My real estate broker told me I would need $1000 earnest money before I can submit a contract on any home.  I want to make sure this is true before I gather the funds.  

I was under the impression that I would not have to worry about earnest money until the contract was accepted.  

If I need earnest money to begin, I assume all beginners would need to save ~1000 before anything else? (The money isn't that big of a deal, it's just something I was expecting at this point in time...    )

Thanks in advance.   :mrgreen:   I really appreciate all the informative answers.

[StacyKellams]

Tayman,

Your real estate broker isn't being honest with you and I suggest you find a new agent. One who will work with you not against you.

The only time I have to submit earnest money with an offer is when I'm offering on VA, HUD, or Bank repo's. Those institutions usually demand earnest money with an offer. Usually a photo copy of a check will keep them happy and they usually want $1,000 minimum.

If you're offering on properties owned by individuals then you can choose to put up as much or as little earnest money as you see fit, but not until AFTER you get a fully signed contract. The agents I work with know that I will submit the earnest money once we have a fully signed contract, not before.

Unless the properties you're offering on are worth more than $100,000 then I think $1,000 earnest money is way too much. I usually offer up $100 earnest money on properties I make offers on through realtors.

If the sellers want more earnest money then make them ask for it and then you can choose whether or not you want to give it to them. The earnest money then becomes part of the negotiation process. Earnest money is fully negotiable just like everything else in a real estate transaction.

Don't let agents bully you around. Remember, they work for you. You don't work for them. There are a lot of realtors out there so shop around until you find a good one who understands what you're trying to do.

[hungryhippo]

thanks for that stacy