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My first house was a HUD Repo purchased in the last half
of 1975. It was up for sale with a starting bid of
$15,000. This was a nice starter house with about 1100 sq ft of living
area. It was a brick 3 bedroom 1 1/2 bath house in Kenner, Louisiana.
The only problem that I could see that was wrong with it was that a cat
may have died in it. There were scratch marks all over the areas
surrounding the windows and doors. There was also a dark area on the
tile floor where it looked like something had died. Other than that it
looked like I had found a really good repo to try to get by bidding on
it. The house was on the main road going into the subdivision, Loyola
Drive in Kenner Louisiana. It was about 6 blocks north of the Interstate
10 exit.
Things you may need before and while looking for that 1st house. You can buy them Here. A little bit about me back in my younger years: 1970 I went in the US Navy for a 4 year stay. While in the Navy I got interested in real estate and got a real estate license in Virginia in 1972. I was probably the worst part time real estate person in the business. The year that I worked part time in Virginia Beach I never got a listing or sold a house. I did learn a little about real estate and met several rich real estate investors in Virginia Beach. In 1975 I was 24 and just got my first real job with a company called Xerox. I had been working with them for about 6 months when I started looking for my first house. I was making $134 a week with an extra $200 a month coming from the US Navy because of a special Government apprenticeship program. I could have went to collage and gotten a free education courtesy of our Government but I elected to go to work. Ok back to my first house. So the starting bid was $15,000. I asked the real estate agent, "Would a bid of $15,500 be a good bid?" She thought I would stand a good chance of being the high bidder. Just to make sure that there would not be a tie bid I decided to go a little higher to $15,651. She wrote up the contract and submitted it to HUD along with my $500 deposit. (Note: the internet had not been invented by Al Gore yet, so she could not do it electronically like it is done now.) Two weeks later I was informed that I was the high bidder. The next in line bid was $15,600. I was so happy that I won the bid and that my strategy of bidding a little higher paid off. Now it's time for financing. If my memory serves me right I put down 20% and financed the rest at 9% interest for 15 years. 9% was considered a good interest rate back in those days. I really didn't have much money saved up but I did manage to come up with about $2,000 and my dad helped me out with the closing cost which was enough to get me into the house. I could have gone and used VA financing since I was in the U S Navy for 4 years but I elected not to. I would not have needed any money down with VA financing but the interest rate was a 1/2% higher and the mortgage insurance was about twice as much as normal. To this day I still have my VA housing benefits. There was a term used back in those days, it was "Cask is King". I believe it still holds true today. Having some money saved up is so important when it comes to buying your 1st house. It will make the whole house buying process so much easier. It will also save you more money over the long haul then you can imagine. If you save 1/2% on your loan and multiply it over 20 years you are talking about saving 10's of thousands of dollars. This brings me to giving you a little tidbit of advise below. The biggest thing I need to impress upon you as a first time home buyer is to start saving up your money. To buy a house with no money down is not done all that often. I have never really purchased a house with no money down. I have purchased a house where I got the down payment from a line of credit from another house I own. Whatever you do, "Don't get yourself a bunch of credit cards with lines of credit on them to buy your 1st house, for that matter any house!" This is a sure fire way to get you so far in debt that you won't be able to sleep at night. Those extra credit cards may also have a negative effect on your credit score. There is a way to track your credit score and know when it goes up and down. I got a year subscription to Equifax Score Watch because I was looking for another house to buy and I wanted to get the lowest interest rate that I could. My score was 768 last year is November 2008. The bank I was using had a chart they used to rate your credit score to the interest rate you would be charged. 760 was their magic number and to be above that number gave you their best rates. The bank loan officer said anything above 720 was good. The loan officer also told me that the difference between 720-759 slot and 760-800 slot was anywhere between .5% to 1.0% depending on the investor that would be loaning the money. So the loan I got at 4.35% could have been well over 5% which would have made a difference of almost $100 a month. I worked hard to keep my credit score up prior to locking at the 4.35% rate. I paid cash for a lot of purchases just so I didn't have a high balance on my credit card. Even if you pay off your credit card every month you can still be hurt by a large balance to credit limit on your card. I ended up finding and closing on a house in March 2009. The house I purchased was one me and my wife planned to live in a long time. She wanted everything new in the house. One problem, we ran out of money. Our solution was to get a Home Depot credit card and max it out with building supplies. They gave me no interest for 12 months on this credit card as long as I did purchases of $2500 or more at one time. I ended doing three $2500 purchases for a grand total of just over $7500. Also got a GE Appliance credit card. Again no interest for 12 months. Maxed that one out also, another $7,000. After doing that I watched my credit score drop by 29 points in the month of April 2009. Down to 739. I started paying down the credit cards and now my credit score is starting to go back up. The month of July 2009 my score is 748. In about 6 more months I should have most stuff paid off and my score should be back above 760. A higher credit score typically means lower interest rates which will reduce your monthly payments – and that could mean saving thousands of dollars over the life of a loan. Score Watch makes it easy to target your ideal score, see interest rates you are likely to receive and watch your score trend over time. To sum it all up: Credit score was 769 in November 2009 Purchased an older house in March 2009 Opened 2 new credit cards in March 2009 and maxed them out. $14,000 Credit score was 739 in April 2009 Large pay down on credit cards and credit score went up to 748 Should be back above 760 by January 2009 Score Watch will keep track of your score and email you if it changes You will be notified when your credit score changes with Equifax Score Watch. I will suggest that if you don't have any money to put down on a house that maybe you borrow it from your parents with the idea of paying them back if you should ever sell the house. Just make sure if they loan you the money that you put it into your savings account a month or two before you go applying for the loan. Some banks check your deposits and if they see a big deposit that will be used for the down payment that flags will go up. Loan companies must think that if you cannot save and come up with money for the house that you must be risky to loan money to. Often they will not loan in cases like this. Remember my first house was a HUD Repo purchased in the last half of 1975. It was up for sale with a starting bid of $15,000 and I got it for $15,651. I later sold this house for $21,500. After expenses I made about $3,500. I saw an opportunity to make a couple thousand dollars if I could find another house to buy and sell this one. So I started driving around the local neighborhood calling on every house that had a for sale sign up in front of it. I looked in the newspaper classifieds and on the grocery store post it boards. Back in those days a lot of stores had a large cork board by their entrances where you could place ads. This was a free service and you would see houses, cars, boats, jobs and most of all baby sitting services posted on the cork boards. Some stores still have this service so look around. Finding a good deal on these boards was high because it was free and people in desperate need to sell a house usually did not have the money to run ads in newspapers or pay a real estate commission and still be able to pay off their loan. I found a for sale by owner in my neighborhood for $24,500. It was a 4 bedroom 2 full bath house with a nice size garage of about 300 sq ft and about 1400 sq ft of living area. I offered them $23,000 for their house contingent on me selling my house. I gave them the right to still be able to sell their house to someone else as long as I didn't have a buyer for my house. They accepted my offer under those conditions. Most sellers are willing to take a little less then their asking price on their house. I put that figure at 5%. So if a seller is asking $100,000 I usually feel that they will come down to $95,000. This isn't always the case. If I am looking to buy a house for investment or to flip I usually offer way less than the asking price. Sometimes 20 to 30% less. Again, this isn't always the case. Sometimes you will find a house that is such a great deal that you will offer the full price just to make sure you get it. I have lost great deals just because I got stingy. I put my house for sale by owner and started getting calls right away. I had a signed contract within 2 weeks along with a $500 deposit. I notified the people that had the other house that I was buying that I had a signed contract and a deposit on my house. They were very happy and wanted to know what to do next. I told them we needed to find a real estate closing attorney that we both could agree on and that I have one that I used on my first house. They said it would be fine to go ahead and use that one. I told them that I would bring the signed contracts to the attorney and mortgage company and that they would probably get a call to come in and sign some papers. It took about 3 to 4 months to go to the act of sale and everything went fine. Closings are a lot faster now then they were 30 years ago. I remember one act of sale to take 6 months. That will be covered in house number four. To this day the (house on Google Maps) is still there and the property has never gone commercial. I would have thought it would be commercial zoning by now especially with the high traffic count and commercial zoning across the street. The greatest lifetime opportunity to make money in real estate is upon us right now. The time has not been better to find great deals in Foreclosures and Pre-Foreclosures or Short Sales. I have never bought a property in Pre-Foreclosure but I have come close. I have purchased several foreclosures. What is a Short Sale - A sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what he owes.
What is
Pre-Foreclosure? It's that period between
when the lender files a foreclosure notice
of default in the public records and the
date the property is to be sold at public
auction or trustee's sale. The average time
it takes to foreclose on a property varies
widely by state, from 90 days to 10 months.
To help you out in this area I recommend the following course. Build A Fortune With Real Estate Foreclosures And Short Sales. Real Estate Foreclosure Short Sale Course Reveals From Beginning To End How To Short Sale A Property. It takes some research to find pre-foreclosures and a good deal of persistence and diplomacy to convince an already-distressed homeowner that you're part of the solution, not the problem. If you are successful at this then you are on your way to making a fortune in real estate. Doing Pre-Foreclosures are not for everybody but it may be right for you. Find out what works best for you and do that. The real estate market has many specialized areas. It is hard to be good at all of them but if you can be good at a couple of them then you are on your way to having a very rewarding and profitable career. Build A Fortune With Real Estate Foreclosures And Short Sales.
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