Hi all,
I'm hoping for some advice around potentially purchasing our first home. Here's some info:
- 34 years old, married, two young kids, no debt, still rent
- $281k in 401k, wife does not have this option through employer
- $67k in wife's traditional IRA (VTSAX)
- $31k in my roth IRA (VTIVX - Vanguard target retirement)
- $60k cash
The house we're looking at is in a desired area in northshore Chicagoland. The assessed value of the home/land is roughly $350k, but it needs north of $100k in renovations. Most of the comps around it sell for much higher and other homes in vicinity sell upwards of $750k+ due to it's proximity to public transportation and lake Michigan. It's a 1960s cape code (1400 sq ft) and the person potentially selling it to us we've known for 10 years. She's moving to a senior living facility and wants to sell it to us, but is stuck on the assessed value even though the house is probably worth $200k + the renovations. We're hoping to purchase it from her directly instead of involving real estate agents and get the home for around $150k (family discount :), stress cost to fix up, etc).
I'm wondering, in your opinions since I have very limited knowledge when it comes to real estate, what are the best options to purchase and finance the renovations needed?
- purchase the property with traditional 20% down and self-finance the renovation over time?
- try to purchase all in cash (need to come up with more cash - get cash gift from relatives, borrow against IRAs, etc) and immediately get HELOC after to pay back borrowed money and fund renovations?
Please let me know if you need more information. We're thinking we can hopefully get the house for under $200k, put money into it, live there for several years, and then sell north of $450k.