Author Topic: Advice Please: To Buy or Live in a Campground  (Read 3248 times)

kandj

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Advice Please: To Buy or Live in a Campground
« on: September 02, 2015, 09:50:17 AM »
Money Situation:
Debt: none
Rent: $600
Groceries: $250
Car Insurance/Gas: $450 (2 cars with under 25 drivers and one who drives 30 miles to work)
Savings: roughly $5000
401K: roughly $6000
Monthly income after taxes: $3200

A little bit of advice would be appreciated.
My husband and I have been renting a small house near my work and we mostly enjoy it. He drives 60ish miles a day for work but I only drive 12, we have amazing landlords and a sweet low monthly rent. The hitch is that we've been building a tiny house for roughly 1.5 years. We plan to have the tiny project finished by May, we have an unofficial agreement to stay at our rental until then, but we've never had a lease term and our landlords would have no issue with us leaving if we bought a house(see below).

This comes to the decision. Do we want to move to campgrounds year round to legally live in our tiny house? It would be 700/month in the summer, 400/month in the winter at different campgrounds, only one campground sort of near us is open all winter but here are several near where we currently live as summer options. The other option we are considering is to buy a house a hide our tiny house behind. We've been to the bank and are unofficially approved for a 100,000 loan. We could have been approved for more but wanted to keep monthly payments at $750/month right now.

There is a foreclosed manufactured house with a basement we've been eyeballing on 5 wooded acres right between our jobs for 60,000. We couldn't even buy 5 empty acres for that kind of money around here. Are we crazy to consider buying a house with such a low down payment, knowing we will need PMI, and not even plan to live in it? We would not have a problem renting the house out to a trusted friend or two, which would basically cover the mortgage anyways, but the houses we've been looking at online would be fixer uppers.

We are torn between wanting to leap into fully considering buying a house or sticking with our plan to finish the trailer before considering anything else. I'm sure another house would come up that we could hide behind, but would probably be more in the 90k+ range.

EDIT/ Should have mentioned: As we are 22 and 23 we would be first time homebuyers and are unsure if buying a house is the best way to eventually hit financial independence.
« Last Edit: September 02, 2015, 01:23:54 PM by kandj »

waffle

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Re: Advice Please: To Buy or Live in a Campground
« Reply #1 on: September 03, 2015, 03:33:07 PM »
If you are serious about living in the tiny house and want to avoid campgrounds here is what I would do.

1. Finish the tiny house
2. Buy the manufactured house + 5 acres
3. Split the lot and sell the manufactured house and 1-3 acres for hopefully at least 30-40k (Check to see if zoning regulations will permit this before you buy)
4. Refinance the remaining ground for a small mortgage with no PMI
4. Move your tiny house to the other couple acres you didn't sell and live very cheaply and if you ever out grow the tiny house you have land right there to build on. 

Bearded Man

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Re: Advice Please: To Buy or Live in a Campground
« Reply #2 on: September 05, 2015, 12:35:48 AM »
What ^ said.

Outlier

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Re: Advice Please: To Buy or Live in a Campground
« Reply #3 on: September 05, 2015, 08:58:21 PM »
If you are serious about living in the tiny house and want to avoid campgrounds here is what I would do.

1. Finish the tiny house
2. Buy the manufactured house + 5 acres
3. Split the lot and sell the manufactured house and 1-3 acres for hopefully at least 30-40k (Check to see if zoning regulations will permit this before you buy)
4. Refinance the remaining ground for a small mortgage with no PMI
4. Move your tiny house to the other couple acres you didn't sell and live very cheaply and if you ever out grow the tiny house you have land right there to build on.

Yup this seems like a pretty good plan. You would have some zoning and paperwork hoops to jump through for splitting a lot but then you have land with a house you can sell off to help cover the price of the land. If the house is in bad shape find a house flipper to sell it to. If the house is beyond repair you could look for someone who might put a modular home on it and sell it off.

Axecleaver

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Re: Advice Please: To Buy or Live in a Campground
« Reply #4 on: September 08, 2015, 11:59:07 AM »
That sounds like a pretty solid plan. You could look into an FHA mortgage, which avoids PMI and allows first time home buyers to put down as little as 3%, but those can have some pretty onerous property condition requirements. You could also look into other first time home buyer options which can vary by location.

Another idea for a home purchase, is to look for potential rental property. If the numbers work and the property is cash flow positive, you've also got some nice-to-have's for a tiny house that you don't get with undeveloped land, like sewer hookups, running water and electricity.

Mrs. Axe and I are toying with this path, too, so I'd really love to hear how your story evolves.

waffle

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Re: Advice Please: To Buy or Live in a Campground
« Reply #5 on: September 08, 2015, 01:34:58 PM »
That sounds like a pretty solid plan. You could look into an FHA mortgage, which avoids PMI and allows first time home buyers to put down as little as 3%, but those can have some pretty onerous property condition requirements. You could also look into other first time home buyer options which can vary by location.

I thought that FHA loans actually have higher PMI rates than conventional and its also harder to get rid of the PMI as you pay down the loan.

kandj

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Re: Advice Please: To Buy or Live in a Campground
« Reply #6 on: September 08, 2015, 01:38:49 PM »
Thanks for the input everyone!

We have decided to go ahead and take a look at the house and property. As far as splitting the land, we wouldn't be doing that right away at least, maybe down the road. It isn't "legal" to live in a tiny house in Michigan so we sort of want to slide by with using the main house as a small source of income by taking on a "roommate" (close friend we can trust to rent the house to).
We are hoping the house wouldn't need an insane amount of work and would be a nice place to live, I'll keep you posted on what we discover.

As far as mortgages go, we are already pre-pre approved for a loan of a larger amount so we aren't concerned about financing, but aren't sure if a regular 30 yr fixed is best given that we would want to move on in 5-10 years. I'm going to do some digging into this forum and see what I find. We were told that we can go with a 3% down payment but would need PMI, which we don't like, but what can we do? We would probably check with another broker because we just went to our credit union for information.

Axecleaver

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Re: Advice Please: To Buy or Live in a Campground
« Reply #7 on: September 09, 2015, 10:33:50 AM »
Quote
I thought that FHA loans actually have higher PMI rates than conventional and its also harder to get rid of the PMI as you pay down the loan.

This link explains how the mortgage insurance works on an FHA mortgage. I guess it's not quite accurate to say there's "no PMI" because there is a fee that works like insurance that is rolled into the loan. But, it offers a way to get into a house with a very low down payment.

https://www.whatsmypayment.com/blog/How-Much-is-FHA-Mortgage-Insurance/


randommadness

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Re: Advice Please: To Buy or Live in a Campground
« Reply #8 on: September 11, 2015, 10:03:41 AM »
Quote
I thought that FHA loans actually have higher PMI rates than conventional and its also harder to get rid of the PMI as you pay down the loan.

This link explains how the mortgage insurance works on an FHA mortgage. I guess it's not quite accurate to say there's "no PMI" because there is a fee that works like insurance that is rolled into the loan. But, it offers a way to get into a house with a very low down payment.

https://www.whatsmypayment.com/blog/How-Much-is-FHA-Mortgage-Insurance/

I owe 130k-ish on one property, FHA, with about a $119 PMI/mo
I owe 110k-ish on another, Conventional, with a $48 PMI/mo

FHA is definitely expensive PMI-wise.