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Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: ooeei on July 21, 2016, 02:49:09 PM

Title: Beginner First House
Post by: ooeei on July 21, 2016, 02:49:09 PM
Hey everyone,

I'm considering getting a foreclosure (or just a good deal) home in the Houston, TX area in the next 8 months or so, and trying to fix it up and eventually sell/rent it out in a couple of years.  I may have some friends move in and pay rent for a little while, but even without them the PITI should still be below the rent for the 1 bedroom apartment me and my girlfriend live in now.  I'm 27, have never owned a home before, but have no problems doing work on it.  I'm a mechanical engineer and love learning stuff on the internet.   Are there any resources those of you who are more experienced would recommend I check out?

So far I've been browsing Zillow and trying to find foreclosures in the $110-130k range in neighborhoods where the other houses are valued at $140-180k.  Is there somewhere I can look at actual recent house sale prices?  So far I'm just using the z estimates, which I imagine aren't terribly accurate.  I figure if I buy a house undervalued to the neighborhood, it should help stack the deck a bit in my favor when selling time comes around.  According to the NYT calculator if we stay for 2 years it should work out cheaper than renting, before factoring in renovations or any rental income.

I have about $20k I can pull out of investments right now without touching retirement accounts (~$90k) or my $5k E-fund.  Assuming I save up for 6 more months I should be able to hit $30k while still maxing retirement accounts.  I have excellent credit, and the house would be in my name only until the girlfriend and I tie the knot.  I'd like to move into a house as the apartment is starting to get cramped, but would like to try my hand at improving it and hopefully making a bit of cash in the process.

Any advice? Resources? Warnings?
Title: Re: Beginner First House
Post by: Choices on July 22, 2016, 01:37:52 AM
Good luck!

1- make sure that your effort and $$ you'll spend on upgrades will get more than that amount back in resale value. Count on spending twice as much on upgrades as you initially budget for and having them take three times longer than planned. In addition, many foreclosures that are truly great deals are sold for cash and you won't have a chance at them.

2- make sure you know what you're getting into by living in a house during renovations. It's only novel and exciting for a week, then it becomes a giant PITA and will test any relationship.
Title: Re: Beginner First House
Post by: pbkmaine on July 22, 2016, 02:40:30 AM
Be sure to take into account in your calculations the transaction costs, including realtor fees, involved in buying and selling a house.
Title: Re: Beginner First House
Post by: Another Reader on July 22, 2016, 08:13:33 AM
The "prices" that you see for foreclosed properties on Zillow are often not actual list prices, but Zillow's estimate of the price if the property were to be listed.  Verify that the prices are for actively listed properties before drawing any conclusions about a foreclosure discount.  Hot markets usually offer little to no discount for foreclosed properties.

Texas is a non-disclosure state, so it can be challenging to find information about recent sales.  Almost all foreclosures are listed on the MLS these days, so talking to a couple of agents should be of some help.
Title: Re: Beginner First House
Post by: ShoulderThingThatGoesUp on July 22, 2016, 09:33:48 AM
I suspect a substantial wave of foreclosures is on its way in Houston. Might not be great timing.
Title: Re: Beginner First House
Post by: rockstache on July 22, 2016, 09:37:47 AM
I suspect a substantial wave of foreclosures is on its way in Houston. Might not be great timing.

Because of the O&G market? Just curious.
Title: Re: Beginner First House
Post by: ShoulderThingThatGoesUp on July 22, 2016, 12:40:34 PM
I suspect a substantial wave of foreclosures is on its way in Houston. Might not be great timing.

Because of the O&G market? Just curious.

Right...people can make it work for a while after they lose their jobs but a year out the bank is going to come knocking. I don't have any kind of magic knowledge, that's just my guess.
Title: Re: Beginner First House
Post by: ooeei on July 22, 2016, 01:38:19 PM
I suspect a substantial wave of foreclosures is on its way in Houston. Might not be great timing.

Because of the O&G market? Just curious.

Right...people can make it work for a while after they lose their jobs but a year out the bank is going to come knocking. I don't have any kind of magic knowledge, that's just my guess.

That's part of why I hope I can find a good deal on one.  I'm in O&G but our group is swamped with work for the next few years at least.
Title: Re: Beginner First House
Post by: Dicey on July 23, 2016, 10:57:12 PM
Texas is a non-disclosure state, so it can be challenging to find information about recent sales. 
Is Texas Zillow different than California Zillow?
Red dot = For Sale
Yellow dot = Recent Sales (about a 30 day lag from closing, some as much as 3 years ago, so not helpful.)
Blue dot = Pre- or Possible foreclosure (often wildly inaccurate or cured, so never on the market)
Purple = For Rent

The most valuable are yellow dots for sales history followed by red dots for current listings. Next is the Sales History drop down. Magnificent Tool! Oops, may not be available in Texas. Finally, if you scroll down the page of a particular listing, look for a Map tab. Click on it and it will show you the history of everything in the area. At least, I hope it will in Texas. Please check it out and report back.

Never to be trusted are Zestimates. Too high where we own rentals and too low in our primary location.
Title: Re: Beginner First House
Post by: Blindsquirrel on July 23, 2016, 11:42:27 PM
 Search MLS with bank owned and short sales as you only criteria. Stay 3 bedroom and above as 2 bd are way worse for renting/resale. Zillow lists auction prices before auction takes place and those are way low to draw interest.
Title: Re: Beginner First House
Post by: Another Reader on July 24, 2016, 07:59:03 AM
Hey Diane:

In the past, sales prices were not available from the local government agencies in Texas and the MLS did not publish or share them.  I just checked Zillow for Katy, TX, a western suburb of Houston.  Looks like fewer than half of the sales shown on Zillow show the sales price.  Perhaps someone in the Houston area can tell us where the information on Zillow comes from and which sales are excluded and why.
Title: Re: Beginner First House
Post by: Jim2001 on July 24, 2016, 12:22:21 PM
Good luck!

1- make sure that your effort and $$ you'll spend on upgrades will get more than that amount back in resale value. Count on spending twice as much on upgrades as you initially budget for and having them take three times longer than planned. In addition, many foreclosures that are truly great deals are sold for cash and you won't have a chance at them.

2- make sure you know what you're getting into by living in a house during renovations. It's only novel and exciting for a week, then it becomes a giant PITA and will test any relationship.

+1 on both.

I lived through both a master bath and kitchen remodel while single.  Both were a PITA!  I specifically planned the kitchen remodel before wifey and I tied the knot and she moved in.  This included a pre-kitchen remodel of the laundry room (where I had a gas outlet) so I would have a place to cook and wash dishes. I didn't include that in the calculation of the kitchen remodel which came in more than double the original budget.

It may be "novel" for a week, but there is nothing romantic about nails and debris on the floor or stepping through plastic sheet dust barriers.  The dust still gets EVERYWHERE!
Title: Re: Beginner First House
Post by: ooeei on July 25, 2016, 06:08:41 AM
Good luck!

1- make sure that your effort and $$ you'll spend on upgrades will get more than that amount back in resale value. Count on spending twice as much on upgrades as you initially budget for and having them take three times longer than planned. In addition, many foreclosures that are truly great deals are sold for cash and you won't have a chance at them.

2- make sure you know what you're getting into by living in a house during renovations. It's only novel and exciting for a week, then it becomes a giant PITA and will test any relationship.

+1 on both.

I lived through both a master bath and kitchen remodel while single.  Both were a PITA!  I specifically planned the kitchen remodel before wifey and I tied the knot and she moved in.  This included a pre-kitchen remodel of the laundry room (where I had a gas outlet) so I would have a place to cook and wash dishes. I didn't include that in the calculation of the kitchen remodel which came in more than double the original budget.

It may be "novel" for a week, but there is nothing romantic about nails and debris on the floor or stepping through plastic sheet dust barriers.  The dust still gets EVERYWHERE!

Good to know, I'll have to really talk it over with the girlfriend before doing anything to make sure we're both on board.  It also looks like some friends of ours may be buying a house and renting us a room, so it might not happen for awhile anyway.  Thanks for the good advice everyone, I'll definitely keep it in mind.

As for Zillow, it shows the "value" of the houses in the neighborhood, but I'm pretty sure that's the "zestimate" and I don't really trust it.  I'm guessing the MLS is a real estate agent only tool?
Title: Re: Beginner First House
Post by: Jim2001 on July 25, 2016, 11:41:41 PM
I'm in the middle of two refi's and compared to my appraisals Zillow is 7% low on one and 10% high on the other.   It's not an "apples to apples" comparison, as they are in fairly different neighborhoods.  But they are both in Los Angeles country where Zillow has access to the county sales data, so I find it interesting that it high on one and low on the other.

I've seen other areas of the country where the county sales data isn't publicly available and Zillow's numbers were off even more.

Find an agent who can pull from the MLS and share the data, or at least the talk through the data with you.  I've been able to get agents to share that with me in the past when I was willing to commit to making my purchase through them (assuming we found something that matched the criteria).
Title: Re: Beginner First House
Post by: ShoulderThingThatGoesUp on July 28, 2016, 06:32:51 AM
Hey Diane:

In the past, sales prices were not available from the local government agencies in Texas and the MLS did not publish or share them.  I just checked Zillow for Katy, TX, a western suburb of Houston.  Looks like fewer than half of the sales shown on Zillow show the sales price.  Perhaps someone in the Houston area can tell us where the information on Zillow comes from and which sales are excluded and why.

HAR.com will give you sales price ranges. That's the Houston Association of Realtors so I assume they know the real value.
Title: Re: Beginner First House
Post by: acroy on July 28, 2016, 06:55:12 AM
My local property tax office lists all values online; it is searchable for recent sales. It's the best free hard data I've been able to find. You may have to dig around a bit in the internet to find it, but it should be out there.
As far as purchasing a starter home and fixing it up: go for it! I did exactly that, at age 26iirc, chemical engineer :)
Make sure the house has no structural issues, ie foundation, etc. Everything else is pretty easy to do. There's a learning curve because you don't have the tools or know-how... but it gets much easier!
GL!
Title: Re: Beginner First House
Post by: ShoulderThingThatGoesUp on July 28, 2016, 08:51:01 AM
My local property tax office lists all values online; it is searchable for recent sales. It's the best free hard data I've been able to find. You may have to dig around a bit in the internet to find it, but it should be out there.

That seems normal, but the local tax office for Houston does not do that. This  (http://www.hcad.org/records/details.asp?crypt=%94%9A%B0%94%BFg%84%94%82%7Bhd%8Eq%8AtXw%5DW%9E%99%A2%D3%89%95%C2e%7CU%8A%82%86%C0%AB%A8%AD%86%5E&bld=1&tab=2)is the record for the first property that comes up on a Houston street with a goofy name that came to mind. No sales information.
Title: Re: Beginner First House
Post by: DeanW5 on October 31, 2016, 09:43:19 AM
I suspect a substantial wave of foreclosures is on its way in Houston. Might not be great timing.

That is why, first thing you should consider is now a good time to buy a foreclosure.
Also you should need to be wary of unpaid liens, including mortgage debt, taxes, construction loans, home equity lines of credit, and possibly a second or third mortgage. I pay attention on it, cause  all of these financial obligations could become your responsibility.