Learn me houses?

Some background:

We currently rent a place and have always rented. Our current house in Quakertown PA is big, with 2.5 acres, a two car garage, tons of storage, no real neighbors, and is surrounded by farmland and woods. It's a sweet deal, but the reality is that, if this sweet deal ever ends, we should probably look at buying a place rather than renting again since it seems we're done jumping around for work for the time being.

Current rent is $1300/month. If we were to get a place with enough space for SWMBO's horse, we could potentially spend more than that on a mortgage payment+taxes and still be in a good place financially because boarding horses isn't cheap. If we have to spend more I could potentially dial back the racing shenanigans, but where's the fun in that? Would love to spend less even if it means we need to put some work into it.

For a house, our wants would be:
-At least a one car garage
-Some land or at least "no man's land" surrounding the property (we don't like having neighbors)
-Doesn't cost a fortune in upkeep/repairs
-Zoning/lack of HOA that doesn't give a crap whether we have broken cars, animals, horse trailers, etc.

And our don't give a berkeleys:
-The house can be small, we find our current place to be too damn big at 2500 sq ft
-School districts don't matter at all
-Night life/social scene/whatever doesn't matter at all, we don't go to bars or anything
-Proximity to shopping isn't a big deal

How does any of this work? Can somebody recommend some good reading? I see lots of foreclosures around, how do those work? I assume it's nearly impossible to get a loan for actual repairs needed to a place?

This is purely research at this point, but it seems like something I should learn about. Halp?

Search your local MLS. Check out Zillow.com; Trulia.com; Realty.com for your area (zip code). These may not be up-to-date. Find out what things sell for in your area.

In reply to trucke:

I've been browsing some of the sites for a few months now, occasionally exactly the sort of thing we would like seems to pop up in what I think our price range (sub $250k, prefer sub $200k?) should be. If we paid more there are ALWAYS places available that check all the boxes.

Being able to deal with some repairs seems to help, I'm not afraid of some paint and interior work but something like a destroyed roof or water damage scares me. The foreclosures especially seem to be all over the place in terms of price for what you get.

Set up an appointment with a recommend Mortgage Brooker. This meeting will require no commitment on your part but will answer the question of what you can qualify for.

In reply to John Welsh :

I'm certain we can qualify for FAR more than we want to spend. Most people don't blow a huge percentage of their income on rally cars and horses, and our credit scores are good.

I like Zillow. gives tons of information about what is for sale in your area. Decide what you want to spend and start looking in your area for homes that fit price and wants.

Asking prices do not translate to actual selling prices. Go look at them at evaluate what you want to pay. Make offer. Make sure you are not in love with the property, so yuo are ready to walk. The seller may come back to you 6 months later and accept your offer if you still want to buy. You never know the sellers circumstances or urgency to sell.

In reply to ¯_(ツ)_/¯:

How is your reserve for down payment? Could you drop 10% down? 20%?

In reply to John Welsh :

Figure 10%? FHA loans sound appealing with 3.5% down leaving us with some cash to make repairs but I need to read more about them, I've also heard of some weird agricultural loans that apparently apply to some places out here.

USDA Loans

How far are you looking to go? There should be plenty of stuff back in the woods near rt100/29 area or further west/north that would suit you guys. We are planning for almost exactly the same thing but need to have a two-income situation for a few years before moving.

I can't offer any realtor advice or referrals. Ours sucked.

We did use an FHA loan and it went well but the inspection can be more stringent. In our case the place was move-in ready and a weird combination of 'FHA/rural' and 'city water!' because the pipeline going to the 2,000 person 'city' runs down our street. So that went more smoothly than most due to the lack of septic from what I understand.

In reply to ¯_(ツ)_/¯:

FHA also requires insurance, which is not always cheap. I went that route though, and if you can get your LTV down quickly you can refinance and drop the insurance.

I know zero about PA but you can save a ton of cash if your looking for a "fixer upper"

Is there any chance of buying out the place your in?

In reply to RedGT:

Not far- west might be OK but north is a no-go as my commute is already 30 miles due south. Our current location is perfect for SWMBO as she needs to be in multiple places for work and it's central to all of them.

In reply to java230:

There maybe could potentially be a future chance to buy the place we currently live, but it would be expensive- and I'm not sure we like it enough that I would want to quit rallying in order to afford it.

¯\_(ツ)_/¯ wrote: -Doesn't cost a fortune in upkeep/repairs

I don't think this exists

In reply to ¯_(ツ)_/¯:

If you want to shoot me a PM I'll send you the name of the realtor and mortgage broker who helped me buy my house in the Poconos last year.

They both do a lot of work in the Lehigh Valley and with the set of requirements I put up I'm surprised we found anything honestly. Both are very responsive to questions and are really good about assisting with unique situations. They actually helped me buy my house from Afganistan last year so I'm not kidding about that.

ProDarwin wrote:

¯\_(ツ)_/¯ wrote: -Doesn't cost a fortune in upkeep/repairs

I don't think this exists

This is an appallingly true statement. Houses are like project cars without wheels. They always need something. Always.

mazdeuce wrote:

ProDarwin wrote:

¯\_(ツ)_/¯ wrote: -Doesn't cost a fortune in upkeep/repairs

I don't think this exists

This is an appallingly true statement. Houses are like project cars without wheels. They always need something. Always.

You guys are making an excellent case for why we should keep renting

Well, first thing you may want to be looking at in that area is property taxes. Live in Atlanta now, but born and raised out there, spent from 2004-2014 in the Pennsburg/East Greenville area. Prior to the move, we spent 5 years in a house that would have fit your needs perfectly. It was in East Greenville, on 3.5 acres. Had neighbors, but they were at least 200 yards away at the closest. No HOA or any of that stuff. In fact, there was a 550 acre farm across the street that boarded horses. The house was extremely large, but other than that fit your wishes. It was awesome, I LOVED it. Had a 3 car garage, which I stuffed 4 cars inside, and kept 3 more outside. But...property taxes were $11k+ per year. If you want land in that area, you're going to pay for it in taxes.

The house was a foreclosure when we bought it. Had been sitting for 18 months. Bank had done a mega sized price drop because they wanted to unload it at that point. Thankfully, we were the first ones to see it after the price drop (it was literally Christmas Eve Day and our realtor was kind enough to take a few hours out of her day and get us in). We put a bid in for full asking price and had to wait...and wait...about 2 weeks before the bank got back to us and accepted. We bought the house "as is", which was a bit scary. We did get them to agree to allow us to do some basic inspections to ensure nothing crazy was going on, but beyond that, we were on our own. The house was only 2 years old at the time, so we were confident it was in good condition.

You can probably find a place in that E Greenville, Barto, Bally area along Rt. 100 that is smaller and with a bit less land for less money. But be sure to understand taxes... Or maybe you can live right near the Q-Mart...

The0retical wrote: In reply to ¯\_(ツ)_/¯: If you want to shoot me a PM I'll send you the name of the realtor and mortgage broker who helped me buy my house in the Poconos last year.

Thanks, I appreciate the offer and may contact you later this year about it- right now we're still researching and honestly have too much going on to get into this the way we should.

In reply to Klayfish:

The taxes aren't being ignored, but they DO fluctuate a surprising amount between different areas and occasionally give a nasty surprise on something that seems like a good deal. Taxes are a big reason that we couldn't afford the place we currently rent.

There was a place for sale a couple months ago that was very tempting, wooded with an 850 sqft house and a bigass 2 story garage, cheap taxes, cheap asking price, and in need of some work. It sold before we could get a showing, and we weren't (and still aren't) ready to jump on something anyway.

We just bought our first house last August, which seems to be very much along the lines of what you're looking for. It's an old, brick farmhouse circa 1840-1850, about 2400 square feet, needs some work, 3 car garage, lax zoning, only about 3/4 acre but we're surrounded on all sides by woods - very private and no close neighbors.

We caught the listing a day or two after it was put up, asking price was under market and asking price was under market so we jumped. We had been casually keeping an eye on the market for a while, but weren't necessarily imminently looking to purchase, just a 'crime of opportunity', so to speak. We were initially looking in the $180-250k range, thinking that's what it would take to get our wants, but ended up landing our place for $160k. Mortgage, including taxes and all that good stuff, is almost exactly $1000 a month.

I agree with John Welsh that it's probably time to talk to a mortgage broker, even do a pre-approval. This gives you an idea of what you can get approved for (for two people with decent incomes and good credit it should be no problem, at all, whatsoever for what you're looking to spend.) It also gives you an idea of what the real cash to close situation looks like. There are a lot of other expenses, home inspection, mortgage initiation fees, ect, that can easily dwarf the mortgage down payment itself, so be prepared for that. Finally, the pre-approval gives you a quick path to getting an offer in, should the need arise (you'll need some sort of documentation from the bank showing you can get a loan before making your offer.)

Now would also be the time to start researching the different mortgage options available - conventional, FHA, USDA, ect. Each has it's different benefits and downsides, though the government backed programs tend to be fairly restrictive when it comes to fixer uppers.

It's a daunting process at first and a lot to take in, but a good mortgage broker and real estate agent can help you through it. Just keep your eyes open and be poised to strike when the opportunity arises. Good luck!

FHA will require PMI--or technically, MIP--through the life of the loan. Currently in cahoots with my lying mortgage broker over that, as he did honestly answer my question of "the PMI will fall off after 5 years, right?". He just neglected to tell me that MIP isn't the same as PMI. Still the best we could have hoped for since we bought in post Brexit and pre-Trump.

Now, as for the house to buy: Remember, this is a long-term depreciating asset. It isn't an investment. I recommend buying something that you can't change that other people want: Waterfront, specific zoning, good schools, proximity to local transit, high ground in a swampy area... These are the things that are going to hold your value up. We paid for the school district--both because we anticipate kids in the future, and because that is what will hold our value up (although we will be paying for that in taxes).

Also, try to buy the best neighborhood that you can. Slightly different from what you're talking about, but the same idea: If you had to sell, why would people buy your house? Make sure there is a reason. Our house is the worst house on the block. One block away, a house just sold for more than we paid 9 months ago, and it was torn down. This is good for us. It means the house is worthless, sure, but the land is desirable--again, because of the school district and proximity to a downtown area. Everything in a house can change. Don't fall in love with a kitchen. You can build a kitchen. You can't build a school district. It is a business decision. Don't let emotion come into it.

Shoot for a bigger garage now. Almost always cheaper to buy it than to build it.

One point of note on the FHA loans - the PMI stays with you for the duration of the loan. Sure, you can refi out of it and drop the pmi once you build enough equity, but with interest rates at all time lows, will you want to? What happens if rates jump over the next 5/10 years? Just something to be mindful of.

We did a conventional loan with 5% down, which is generally the minimum. We have PMI on our loan as well, but it drops out once we hit 20% equity. With our interest rate where it is, I NEVER want to refi this thing.

I think the way USDA works is that in lieu of a flat rate PMI, you pay some proportion of the outstanding principle. So naturally the penalty you pay will go down over time, but it's still always there.

mtn wrote: Now, as for the house to buy: Remember, this is a long-term depreciating asset. It isn't an investment. I recommend buying something that you can't change that other people want: Waterfront, specific zoning, good schools, proximity to local transit, high ground in a swampy area... These are the things that are going to hold your value up. We paid for the school district--both because we anticipate kids in the future, and because that is what will hold our value up (although we will be paying for that in taxes). Everything in a house can change. Don't fall in love with a kitchen. You can build a kitchen. You can't build a school district. It is a business decision. Don't let emotion come into it. Shoot for a bigger garage now. Almost always cheaper to buy it than to build it.

There is certainly some truth to MTN's statements. As a recent new homeowner in an area with a super hot market and houses that 9/10 times were too expensive to tear down or remodel, we decided to spend a bit more and get a house that has a certain "wow" factor to it. We beat other offers not because we paid more, but because we signed more quickly.

Don't get too caught up in the idea that you can just build a new kitchen, build a garage, expand the house by 500sqft, because sometimes doing so just isn't worth it, depending on the property or surrounding area. We looked at several houses that were really affordable in the 225k-250k price range and had nice property, but needed another bathroom, or a roof, or a garage, or had quirky neighbors or interior designs. By the time we had added the things we wanted to live with, we would've spend $300k but lived in a construction zone for years. We decided to just jump in to a house that already had what we wanted.

Another big consideration is rental potential along with the thought of "if you sell today will someone buy tomorrow?" Sometimes houses in cities or urban environments may take awhile to sell, but could rent quickly and quite profitably. Sometimes beautiful properties in the countryside are awesome places to live, but sell slowly and rent at a loss. If you're looking at places with no other buyers, there is a reason for that. Once you start competing with other buyers, you're looking at the right houses.

Any reason why you can't put in an offer to buy out your current landlord?

It doesn't sound like you are chasing any particular advantages at another property.

pheller wrote: Sometimes houses in cities or urban environments may take awhile to sell, but could rent quickly and quite profitably. Sometimes beautiful properties in the countryside are awesome places to live, but sell slowly and rent at a loss.

This is important. I recently watched 2 people I know go through the process of selling absolutely gorgeous properties in the "countryside" (not really) and deal with the to the tune of many hundreds of thousands of dollars