Financing suggestions

I’m the executor of my mother's estate, which includes an old farm house.  The house is about 10 miles away from me – so I don't think the purchase could be considered a second property (vs. investment property).  I’m currently in the process of trying to purchase her house to help my son get started in farming. He would live in the house and farm some of the land.  After a year, if he did well, he would purchase it from me, otherwise I would sell the property.  During the year, he would be paying me enough to cover the mortgage and taxes.

I'm wondering about the best way to do the purchase.  I've thought of a few things –  purchase the house myself (20% down), cosign for Steven to purchase it (5% down), or possibly use some of my home equity and/or equity of my mother's house to help with the purchase. I’d like to know your thoughts/recommendations on the financial and tax aspects of this situation.

Goal:

  • Help my son, Steven, who's 23, purchase and move into my mother’s house (in East Windsor), which is currently owned by her estate

Considerations:

  • Financial
    • House being purchased
      • Purchase price is $170K
      • Thorough market analysis came in at $180K
      • Zillow estimate $233K
    • Chris / Doris
      • Income ~ $200K
      • Credit Score – 820
      • Liquid funds – $14,000
      • Inheritance – ~$14,000 (available upon closing estate, probably a couple of months after sale)
      • Additional funding could be procured if required
      • Primary residence valued at $400K with $250K mortgage
    • Steven
      • Income – $0
      • Credit Score – 755
      • Liquid funds – $20,000
      • Minimal prior incomes – summer work
      • Currently in Peru until March
    • Steven's LLC
      • Both Steven and his cousin are ‘members’
      • Newly formed farm
      • $75,000 loan obtained
      • First payments due in 2019
      • ~$20,000 startup cost (bulk of equipment is available to him at no cost)
      • Experienced, long-time farmer providing guidance
  • Post-Sale
  1. Steven would live in house
  2. Two or three acres would be farmed
  3. After a year, the house would either be sold (if the farm didn’t work out), or purchased by Steven
  • Desired
  1. Minimize mortgage / taxes for first year
  2. Minimize down payment, ideally less than $14K
  3. Avoid liability exposure on property if any farm workers sued

Any suggestions or thoughts would be greatly appreciated.

Thanks.

Chris

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Pricing out a house in a sellers market

Buying a home in Clarksville, Tennessee and about to start offering on some homes. Do I want to try to get a cheaper price, but probably have to pay closing costs (around 6,500) or should I try to pay what they are asking for and have them pay the closing costs.

I can pay the closing costs, it’s a VA loan so that helps with not having to pay 20% down. But, just trying to figure out in the long run, what I’m looking at in regards to long term payments and if it’s better to pay (example) 189,000 and no closing fees, or 180,000 and pay closing fees.

I understand it’s a dance and each party is trying to get ahead, I’m just trying to figure out for me what would be best to shoot for in this scenario.

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Interesting little mortgage conversation

Just an odd conversation I thought I'd share.

I'm 49 and in the process of buying my first home. I'm a public school teacher (there are 3 1/2 million of us) having taught for a few years now, divorced, father of 3. Using VA benefits.

The loan officer with one of the companies I was working with to secure a pre-approval called and said he had questions about my employment. OK.

"Are you working full-time?" he asked. Yes I answered.

"But, this says you have a 205 day contract."

"Right. I'm a teacher. I teach the first of August until the end of May, 205 days teaching unless I do summer school (which I do probably every other summer).

He kind of grunted and said, "Having just a part-time job will be a problem."

I replied, "It's full time. I have benefits. Health insurance. Pension. A decent income."

Then he asks about the 12 month payout. Of course, I explain that I'm paid August through May, but I have the school district withhold from each paycheck so that I get four paychecks – roughly the same net as all year – in June/July.

"I don't know if we can get pre-approved for a part-time job and even if we did, getting closed might be a problem."

And that wasn't even the end of it. I had to explain to him what stipends were. I am asst. wrestling coach and student gov't sponsor – I get a stipend for both. He got fixated that my primary income (teacher salary) did not match my pay stubs. But as I was instructed, I did the primary income as my base for teaching, then listed the stipends under "other income" – again as I was instructed by them.

I think at one point he honestly heard me smack my head.

Now, everything worked out fine with another company, in fact I had pre-approvals from two other companies in hand, but this kind of made me laugh, and I wondered if I got the one loan officer on the planet that did not understand the profession of teaching – not really an uncommon profession.

Needless to say that was my last contact with them. I stopped returning calls/emails/texts.

I think my experience also hammers home the need to shop around, talk to quite a few companies, and be sure to find one that understands your professions, be it a teacher, or self-employed, or whatever.

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US citizens purchased a house (in US) while abroad – help and advice?

My husband and I just purchased a home in Astoria, Oregon while we’re currently in Koh Samui, Thailand. We’ve been told the process is very easy and so far, it has been! However, now that we’re getting into the nitty-gritty, it’s become a bit difficult.

It’s necessary for us to wire transfer money to a title company. They REQUIRE a wire transfer or cashier’s check and will NOT accept an ACH/direct deposit. We’re finding this very difficult to do while overseas. Our bank will not do it unless we went to the branch in person (obviously impossible). Right now, our only solution is to have a family member in the U.S. do this on our behalf (we’ll provide them with the transfer account info/routing number and then we’ll reimburse them).

It seems like it should be SO much easier than this to get a wire transfer from one US bank account to another, despite me/us being out of the country. Am I wrong? Not to mention – the title company’s bank is the same as our bank!

This is also a bit worrisome because I’m wondering how the down payment will work when it’s such a larger amount. Another struggle, of course, is the frustration of being 15 hours ahead in time zones. Entire days are wasted trying to get one question answered. Hence the reason I’m looking for insight on forums!

Any help, ideas, insights, would be great! Currently waiting to talk to my agent about dealing with the transfer of money as the ball keeps rolling.

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Downsize to save?

My husband and I are using this year to save for a home. He is a veteran so we don’t need a down payment, but we still want to have something significant saved up for other costs that come with purchasing a home (we would be first home buyers).

My question is: would it make sense to downsize from our 2 bed apartment to a 1 bed apartment in order to save money towards our home buying goal? It would be $500 less a month in rent and we don’t truly need 2 bedrooms since it’s just us. He doesn’t seem to think it will really save us that much in the long run but I think it’s worth looking into.

Btw, we are hoping to buy early next year so we would be downsizing to a 1 bed in a 12 month lease.

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Should I use cash or leverage to purchase property? (UK)

I am 27 years old (living with parents) and saving up ready to buy my own home next year, as well as wanting to to start investing. By the time next year arrives I will have around 100k saved up. I live in a very inexpensive area (Hull) and take home around £1200 a month from my job. I will be living with my girlfriend and we both aim to put around 20k each down for a deposit to buy our new home. I don't seek an expensive home because I am a simple guy and I want my money to be invested in rental property.

That would leave me with 80k. I don't share money with my girlfriend, our house would be 50/50 with mortgage payments but the 80k is all mine and would be solely my investment. So….if I have 80k to invest, should I buy a cheap home with cash and then save cash for another one? Homes around here can be bought for 50 -100k. Or should I take on some debt and use the money as a deposit for 2 or 3 homes?

Also, is 20k (40k combined with g.f) reasonable deposit for OUR home or would you want more or less? I aim to pay mortgage off quickly and the home's value wouldn't exceed 80k. I am open to all ideas and advice!

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Buy Investment Properties or Pay Off Primary Mortgage

A little background – purchased my first home (210k@4.25/5% down w/ PMI, house hacking w/ roommates) and a cashflowing investment property this year (120k@5.25/20% down). Things are going well and I want to keep scaling my portfolio. But I am at a loss for the best way to proceed. The way I see it, my options are:

  1. Keep getting smaller SFHs w/ 20% down until I reach my DTI limit since I haven’t been doing this long enough for banks to count my rental income yet. I could probably do 1-2 this year w/ this strategy.

  2. Put all extra funds towards paying off my primary residence until PMI comes off. Once under 70-75% LTV I can start looking at tapping extra equity with a HELOC into investment properties to convert my primary residence into a better performing asset. I wouldn’t be able to add any new properties this year because I have so little equity in my home right now.

  3. Save up 75-100k flat, and then start BRRRRing. Also wouldn’t be able to add any new properties this year or maybe even next year, but then could endlessly after?

I’m thinking that options 2 or 3 are probably the more prudent in the long run, but I am having a problem giving up the opportunity cost of being able to add to my portfolio now/whenever I have enough for a down payment.

I would love to hear experiences from others who have gone one of the above routes and why/how they did it! Also open to options I’m not even imagining yet.

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First time buyer question on rent buy lag

So my current lease ends at the end of may, and I started in december. One of the bad things about searching is I see properties, have a list of prospectives, but it's a sellers market in va so, that list keeps changing.

I found one I really really like and want to put an offer down, but what i dont want is to pay a house payment and rent for 3-4 months. I can afford it, but I want to keep as much money as I can and use it on my new property.

My question is what is the happy medium I should shoot for in time line?

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Deciding on getting a partially renovated house that’s owned by an asset management company. Bad idea?

I've been looking for a house for almost two years. I had a question about the difference of buying a foreclosure from an asset management company versus a regular bank. Is it the same? The house in question had the kitchen and 2.5 baths renovated recently. Everything else is original for a 1930s home. Home history shows it was purchased in 1989 and now it's on sale as a foreclosure being sold AS IS. Is this suspect? I find it odd that someone started to renovate it and not finish everything and now it's foreclosed on but no sale history since 1989. Wanted people's opinions on this and should risk the cost of getting it inspected. Major issues could turn up for sure but even if it's like a huge 50k cost to repair everything, it's cheaper than neighborhood comps. Appreciate opinions of you more seasoned veterans of this space.

More info about the house:

Since I'm not an expert I don't know what to think. It's on pretty good shape as far as cosmetic stuff goes. The renos are probably cheaply done so not counting on quality. Not sure how the home is from a structure standpoint. Homes in this area of this size go for 550+ and this one is listed on low 400s. Willing to complete the repairs that could come up inspection.

Location: metro nyc suburbs

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