Author Topic: Perfect opportunity except I don't have enough money.....  (Read 4642 times)

my4fireflies

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Perfect opportunity except I don't have enough money.....
« on: May 10, 2017, 05:06:34 AM »
A man in town is selling his home. It's a one-room School House built in 1752. It has running water but no bathroom just an outhouse LOL it's set on .7 of an acre down a dirt road surrounded by Woods. It's 970 square feet exactly what I was looking for when we downsize as the children leave our big home. He's desperate to leave he'll take less than $40,000 I think it's a perfect opportunity for me to stay in this town that I love and be able to downsize but I have no money saved I'm on the last leg of paying off my credit card debt. My intentions are to own both homes for a couple of years paying off the small home and fixing up the large home and then selling the large home and moving to the small home. This the *exact* plan I have been hoping for but I don't know how to buy a property with no money. (My savings is only $750! As I am putting all extra $$ on debt. I've paid off 42k in 2 years.)   does it make any sense to take out a personal loan for the down payment? Also I don't know how to buy property without a realtor. Any suggestions? This man is desperate and wants to move out of state like yesterday. First offer grabs the deal.  any thoughts or suggestions thanks in advance

my4fireflies

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Re: Perfect opportunity except I don't have enough money.....
« Reply #1 on: May 10, 2017, 05:22:33 AM »
I should add, that 1. I don't mind the outhouse for now, but would need to put in a septic and bathroom (I'm thinking 35k?). Also, the wealthy neighbors own over 100 wooded acres, and I'd like to eventually approach him and buy 2-5 (I'm guessing another 40k or so). This property is THE ONE that I've had my eye on for almost a year. I was hoping the owner wouldn't want to sell for a little bit longer while I got my ducks in a row. As some added info: I currently owe 166k on my house. I could probably sell it for 180k. I bought at the height if the bubble and houses are a dime a dozen out here. My current payment with taxes is $1250/mo. We gross about 90k a year. The point is to reduce our mortgage. If we buy the house, put in a septic and bathroom, and buy the additional acreage, I figure we will still end up borrowing 50k LESS, then our current home. I just don't know where to start.

CareCPA

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Re: Perfect opportunity except I don't have enough money.....
« Reply #2 on: May 10, 2017, 05:38:31 AM »
A couple things I would do before worrying about the money:
1. Does it have a well, or town water? If a well, can you even put a septic in with that lot size? Around here, your well and septic have to be at least 150 feet apart.
2. Will the neighbor ever sell you land in the future? If not, and that's a deal breaker, then I wouldn't move forward with trying to line up financing.

Villanelle

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Re: Perfect opportunity except I don't have enough money.....
« Reply #3 on: May 10, 2017, 05:46:53 AM »
Do you think he'd be willing to owner-finance, perhaps with little to no down?  Or a modified rent-to-own situation, which specifically says you can modify the property?  (The latter seems like it's less risk to him.  At worst, you pay him rent for maybe 3 years and improve his property, and then walk away or stop paying, and he has your rent money plus an improved house.)   It seems like it needs a lot more investigation on your part but if, after that, you still think this is The House, if can't hurt to make him that kind of offer. 

my4fireflies

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Re: Perfect opportunity except I don't have enough money.....
« Reply #4 on: May 10, 2017, 06:17:39 AM »


A couple things I would do before worrying about the money:
1. Does it have a well, or town water? If a well, can you even put a septic in with that lot size? Around here, your well and septic have to be at least 150 feet apart.
2. Will the neighbor ever sell you land in the future? If not, and that's a deal breaker, then I wouldn't move forward with trying to line up financing.


It is town water. My plan is to tour the property. If I like it, I will approach the neighbor and ask what he thinks about selling 2-5 acres. This is a small town. We all know each other on a first name basis. I work at the town library and the neighbor is on the finance committee. The conversations would be casual, but the sales would a be on the up and up. It's pretty much 1950 Mayberry around here. We hardly even have internet or cable TV. Lol

my4fireflies

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Re: Perfect opportunity except I don't have enough money.....
« Reply #5 on: May 10, 2017, 06:21:56 AM »
I was thinking that while touring the property he might tip his hand... I know he is DESPERATE to get to Maine ASAP. He may be open to different ideas. I'm somewhat "desperate" to own that PARTICULAR piece of property. The house next door will be going up for sale in a few years, and I'm hoping one if my children will be in a position to buy it, or if we are doing well financially, we may like to purchase it. Many possibilities. We live this town, but we live on the main highway. We love our home, and the town, but we HATE our location.

Do you think he'd be willing to owner-finance, perhaps with little to no down?  Or a modified rent-to-own situation, which specifically says you can modify the property?  (The latter seems like it's less risk to him.  At worst, you pay him rent for maybe 3 years and improve his property, and then walk away or stop paying, and he has your rent money plus an improved house.)   It seems like it needs a lot more investigation on your part but if, after that, you still think this is The House, if can't hurt to make him that kind of offer.

my4fireflies

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Re: Perfect opportunity except I don't have enough money.....
« Reply #6 on: May 10, 2017, 06:23:51 AM »
I'm 42, dh is 41 and just starting to plan ahead. Reducing our mortgage by 50k seems like a good idea.

NoNonsenseLandlord

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Re: Perfect opportunity except I don't have enough money.....
« Reply #7 on: May 10, 2017, 08:24:47 AM »
Expect that there will be a LOT of maintenance on a home that was built in 1752.

Since you are 40+ years of age, and only have $750 in savings, maybe you should approach an investor and have them buy it and you rent it.  You do not have enough money to buy a home.  Based on your lack of savings at 42/41, you likely never will.

my4fireflies

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Re: Perfect opportunity except I don't have enough money.....
« Reply #8 on: May 10, 2017, 08:56:30 AM »
Expect that there will be a LOT of maintenance on a home that was built in 1752.

Since you are 40+ years of age, and only have $750 in savings, maybe you should approach an investor and have them buy it and you rent it.  You do not have enough money to buy a home.  Based on your lack of savings at 42/41, you likely never will.

I own a home currently. Built in 1815.  Been here 10 years. I am painfully aware of the upkeep of antique homes. 😀
« Last Edit: May 10, 2017, 09:00:03 AM by my4fireflies »

Dicey

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Re: Perfect opportunity except I don't have enough money.....
« Reply #9 on: May 10, 2017, 09:12:18 AM »
I respectfully think you may have come to the wrong place in search of approval.

NoNonsenseLandlord

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Re: Perfect opportunity except I don't have enough money.....
« Reply #10 on: May 10, 2017, 09:39:50 AM »
I own a home currently. Built in 1815.  Been here 10 years. I am painfully aware of the upkeep of antique homes. 😀

Maybe you can get a HELOC, buy the home with the HELOC, and then sell your existing home.  At closing the HELOC will be paid off.  That assume that over the past 10 years you have gained at least $40K+ in equity.


my4fireflies

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Re: Perfect opportunity except I don't have enough money.....
« Reply #11 on: May 10, 2017, 12:42:00 PM »
Just got off the phone. He will take 20K.

my4fireflies

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Re: Perfect opportunity except I don't have enough money.....
« Reply #12 on: May 10, 2017, 12:43:56 PM »
I respectfully think you may have come to the wrong place in search of approval.

Thank you for your honesty.

Mr. Green

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Re: Perfect opportunity except I don't have enough money.....
« Reply #13 on: May 10, 2017, 03:06:56 PM »
Expect major resistance from banks. I'd be willing to bet not bank would finance that with an outhouse. The seller holding the note might be the only way to go unless you can come up with cash for the sale, by personal loans or other means.

waltworks

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Re: Perfect opportunity except I don't have enough money.....
« Reply #14 on: May 10, 2017, 03:24:20 PM »
Given that
-The property is ancient, weird, and probably out of compliance with all sorts of codes/laws.
-You have no money.
-The amount of the sale would be tiny.

...my conclusion is that banks will refuse to have anything to do with this. You'll need the owner to finance, or to beg/borrow/steal the money from friends or family. Given the status/description of the property I don't think any private investors would touch it.

Really, owner finance is the "smart" move here. The really smart move is probably staying the hell away from the property to begin with, but c'est la vie.

-W

my4fireflies

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Re: Perfect opportunity except I don't have enough money.....
« Reply #15 on: May 10, 2017, 03:29:37 PM »
I'm thinking personal loan. The property is "grandfathered", this the outhouse. Not sure what that means exactly, as far as a new owner.

Dee18

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Re: Perfect opportunity except I don't have enough money.....
« Reply #16 on: May 10, 2017, 04:25:26 PM »
Before making any offer get firm estimates about the cost of adding a bathroom and septic.  And make certain septic is even possible on the site.  This does not sound like a viable project for someone with no money.

Hargrove

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Re: Perfect opportunity except I don't have enough money.....
« Reply #17 on: May 10, 2017, 05:25:53 PM »
I had a hard time getting a credit union to even give me a hypothetical on a co-op in a high-tax, low-income area that had dropped its price to 28k.

It had a toilet.

I don't even know the laws around occupying a house like that - new owners sometimes assume the obligations to update to meet codes and all that, and the schedule is not necessarily forgiving. You don't have the capital to make this work even with owner-financing. If you paid 42k debts in two years, you could cashflow 20k for the property itself, but then you probably wouldn't be able to pay for the other costs of owning it.

Blindsquirrel

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Re: Perfect opportunity except I don't have enough money.....
« Reply #18 on: May 10, 2017, 06:08:03 PM »
   With only an out house, his pool of buyers is very, very small. His pool of potential renters is probably also very small.

Mr. Green

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Re: Perfect opportunity except I don't have enough money.....
« Reply #19 on: May 10, 2017, 06:35:07 PM »
I'm thinking personal loan. The property is "grandfathered", this the outhouse. Not sure what that means exactly, as far as a new owner.
You will probably find that "grandfathering" only applies to the status of the house with respect to what the county or governing body (municipality) requires for waste disposal. A pre-existing outhouse could be grandfathered, meaning the addition of a septic system would not be forced on you. This type of grandfathering tends to be married to the structure, regardless of owners, so as long as the house is standing and livable you will probably be able to use the outhouse. Where is the sink water going at the moment, out on the ground?

However, this grandfathering does not extend to how a bank will feel about that asset. Expect banks to balk as soon as they realize there is no formal waste disposal system. You probably will not be able to add any additional plumbing without the addition of a septic system, or hooking to town sewer because new plumbing will have to adhere to current health department standards.

If the property really is that perfect for you, you may be able to take advantage of the fact that the seller's pool of buyers will be extremely small to negotiate a great deal. This is a fairly risky proposition though, especially if you live in an area where septic rules have become strict enough that some properties just won't accommodate a septic system any longer. In some places, where a traditional septic system won't work, but there is an existing structure, the law allows for the use of experimental septic systems like a peet moss system. You would really need to do some digging on what your local governing body allows. If you have sewer access, that would make things much less risky, because while it would cost you a healthy chunk of money to hook up, there's probably no chance you could be stuck with a property that has no waste disposal options.

You absolutely need to verify all these things with the governing body that applies. While this is a potentially risky property, under the right set of circumstances (waste disposal access is known, seller is willing to negotiate extensively to sell, etc.) it could be a pretty sweet deal if it's exactly what you're looking for.

my4fireflies

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Re: Perfect opportunity except I don't have enough money.....
« Reply #20 on: May 12, 2017, 07:34:39 PM »
I spoke to to the building inspector. He says there are no bylaws governing any improvements. The only problem would be if it is on the historic register. Called a dear friend on the historic commission. She had never heard of the property. There is no sewer in this small town. We are asking for a personal loan of 20k for the purchase of property, no penalty for early repayment.  My plan is to log it as a heat source for our current home and I will go back to work for 3-5 years, until we are ready to sell the big house. The equity in the big house should cover most of the expenses of the small house. My rough estimates have us mortgage free in 5-10 years, instead of 15-20.

lhamo

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Re: Perfect opportunity except I don't have enough money.....
« Reply #21 on: May 12, 2017, 07:54:30 PM »
You make 90k.

Your current mortgage + taxes is $1250/month.

You live in a small town -- assuming middle to lower cost of living, esp given relatively affordable housing expenses.

Where has the rest of your money gone?    Why do you not have any savings?

If I were in your position, I would not buy this house.   You have not demonstrated the ability to plan ahead sufficiently to have even a small down payment, despite having had your eye on it for a long time.   That makes me question whether you are able to plan/control spending sufficiently to bankroll the needed renovations to make it livable.  Do you have any idea how expensive a septic system can get? 

I'm sorry if this sounds harsh and like I'm crushing your dreams.  But dreams built on wobbly financial foundations are more likely than not to turn into nightmares....

sequoia

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Re: Perfect opportunity except I don't have enough money.....
« Reply #22 on: May 12, 2017, 11:32:15 PM »
Three things:

"My savings is only $750!". Maybe I am missing something here, but how is this not hair on fire scenario? How is it that you are thinking about buying another property that need major work for it to be livable? No offense here but you should not be looking at buying anything more than daily necessity and food, while trying to build up your saving. See lhamo post above.

"I currently owe 166k on my house. I could probably sell it for 180k.""I bought at the height if the bubble and houses are a dime a dozen out here." Is this based on comparable property around you? If not, you are making some bold assumption here. You might think your house worth 180K, but does anyone wants to pay 180K for your house, that is the most important part. In small town, I am not sure how hot the market can be - you said it yourself houses are a dime a dozen here.

Not related with the above. So you are ready to jump in to buy the house at $40K. Now you said the owner is desperate, and will let you have it at $20K. Forget the price for a sec, have you ever thought about having this property appraised before even thinking of buying it? I am wondering if this property only worth 10K or 5K. It may have some major problem, like ground contamination or something that made it worthless.
« Last Edit: May 12, 2017, 11:40:34 PM by sequoia »

my4fireflies

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Re: Perfect opportunity except I don't have enough money.....
« Reply #23 on: May 14, 2017, 08:26:43 AM »
Ok. Y'all talked me out if it. Silly me. 😆

Dicey

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Re: Perfect opportunity except I don't have enough money.....
« Reply #24 on: May 14, 2017, 10:01:42 AM »
Oh. I just connected the dots...I can understand that a Big Project might look like a nice distraction right now, but perhaps in addition to the lack of funds, you have enough on your plate right now.

Car Jack

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Re: Perfect opportunity except I don't have enough money.....
« Reply #25 on: May 16, 2017, 12:05:42 PM »
Interesting.  I know that in my state (Massachusetts), selling a home opens up a can of requirements that either the new owner has to pay for (septic system) in order to sell or the new owner has to comply with.  Other things like additions and even small pieces of work requiring a permit open more cans.  Heck....we had propane for stove and water heater.  The propane company changed from small tanks to one big tank.  The electric company came by to change the electric meter to one they could scan electronically and reported that the new, larger propane tank requires that it be moved (code allows smaller tanks only).  Several thousand dollars later for nothing of any value to us, we comply.  Expect much bigger requirements to hit you.