Buying a small house in my situation?

[kwynn]

I reserve the right to DD this due to a lot of personal info.

I'm struggling to find a place that fits my budget for renting that's not a mess and is suitable to run a business (I work out of my home so I am there 99% of the time).

I really wanted to find a townhouse, condo, or single family home to rent.

That's proving hard in my price range and town I'm looking in, and some of these places are not in good shape at all for renting (very loud wallpaper, very dirty old carpet, outside looks run down, no appliances)--these were Grandma's house, and they can't sell it, so they're renting it out, but it's not like a long-term thing and they're unwilling to change most things, which I totally get (when you rent an apartment, on the other hand, you seem to get more neutral decor, lawn has been kept up, etc).

Is it normal to not get use of a garage or workshop or shed? Saw a GREAT house, but there is tons of stuff in the yard, and it appears the large workshop and garage are going to be used by the owners still for their side business (I wanted to use it for my business)--and the lawn didn't look very presentable for my clients to come. I worry that I can't control some things like that if I rent and the owners are still coming by with their things.

I found a TINY house for rent and looked at it. It's cute. Very clean. Small, only one bathroom and I wanted two. It's a bungalow and from 1915. I like that old style. WELL below my budget--might be tight with a roommate and existing furniture.

It's also for sale. It needs some updating (no dishwasher, no second bathroom, a few small broken railings and a crappy looking porch). It's cheap but I could fix it up and pay less than the rent every month for a mortgage.

Am I crazy to even consider for a moment buying? I wouldn't consider it, but it's below my means. It isn't what I wan forever-it's a starter place.

Longterm goal is to own several houses and rent them out as a source of income, for the record, as I grow out of each one.

I could pay cash for the home; it would drain my liquid savings and reduce my total monetary assets by 10%. Also, would have a roommate there to pay *me* instead of us both paying someone else.

Sorry for the long text--don't have anyone else to ask about this and you ladies always bring up such good points and give great advice.

[kwynn]

Dec 26, 2012 14:24:20 GMT -5 @peggyolson said:

I vote buy a house and we can be neighbors, if you're thinking of the area I'm in. Houses here are extremely inexpensive. Depending on your mortgage rate and the ROI you're getting on your liquid savings, would it make more sense to take out a small mortgage and keep the savings liquid?

I am You can probably figure out which house this is on the MLS. It's by the Catholic Church, hinthint.

[Susie]

Dec 26, 2012 14:19:21 GMT -5 kwynn said:

Is it normal to not get use of a garage or workshop or shed? Saw a GREAT house, but there is tons of stuff in the yard, and it appears the large workshop and garage are going to be used by the owners still for their side business

Whether or not it's normal, we ran into that. We rented an SFH a few years back, and got use of the driveway, but not the garage.

It was super frustrating, because the lease terms were such that we were responsible for snow removal and yard work, but WHERE THE HELL WERE WE SUPPOSED TO KEEP THE DAMN LAWNMOWER? The living room?

It didn't seem reasonable to me, but the landlord was adamant. We didn't last long there.

[kwynn]

Dec 26, 2012 14:29:08 GMT -5 @cse1960 said:

if it's below your budget, yahoo!
However. 1915 houses typically do not have electrical or plumbing systems that are up to code, and seldom have adequate heating, air conditioning or insulation either. I would not buy a house this old without first having an inspection from a termite person, structural engineer, electrical expert and plumbing expert. These kinds of places can rapidly turn into a huge, and I mean huge, money pit.

Yes, absolutely, I would not do anything without full inspections. Even then I'd proceed with caution as I grew up in a house built in 1900 and it certainly had tons of problems.

That area of the country has a lot of older homes though---the house I like second best is from 1924--everything is just old up in Pittsburgh.

[kwynn]

Dec 26, 2012 14:30:09 GMT -5 Susie said:

Dec 26, 2012 14:19:21 GMT -5 kwynn said:

Is it normal to not get use of a garage or workshop or shed? Saw a GREAT house, but there is tons of stuff in the yard, and it appears the large workshop and garage are going to be used by the owners still for their side business

Whether or not it's normal, we ran into that. We rented an SFH a few years back, and got use of the driveway, but not the garage.

It was super frustrating, because the lease terms were such that we were responsible for snow removal and yard work, but WHERE THE HELL WERE WE SUPPOSED TO KEEP THE DAMN LAWNMOWER? The living room?

It didn't seem reasonable to me, but the landlord was adamant. We didn't last long there.

That's what I was wondering. I'm mainly concerned because, when I went to look at the home, I saw a car in the driveway and the owners were stopping by and getting their business things. There was a huge pile of junk and their dog was let out of the car and running loose on the property.

Was it annoying in your case, like were the owners always coming over at any time? Checking up on the place? (I live in an apartment now and so things are different). I lived in a townhouse 6 years ago and the landlord and I both used the shed, so no big deal in that case. Just wondering if that feels really weird--what if they're in the driveway behind me or need to get into it and I'm blocking it and out of town or sleeping or something?

[kwynn]

Dec 26, 2012 14:44:29 GMT -5 gravytrain225 said:

I live in a LCOL area. I was not truly aware of high taxes are until we were really ready to buy. Our taxes are more than our mortgage payment. I would look into those and make sure you can really afford the house. I'll admit ignorance, but I feel like in LCOL everyone tells you to buy a house because they are so cheap, but we still pay a decent amount on our monthly payment.

Good call--I believe the taxes are around $100/month on the place. So not cheap but not terrible--taxes just went up for many in the area due to reassessments.

[Deleted]

The idea of buying a 100-year-old house on a smaller income makes me really nervous. I'd want to know the mortgage, taxes, state of the roof/furnace/foundation, and exactly what's going on with your savings situation before I could say yes or no though.

[Susie]

Dec 26, 2012 14:44:55 GMT -5 kwynn said:

Dec 26, 2012 14:30:09 GMT -5 Susie said:

Whether or not it's normal, we ran into that. We rented an SFH a few years back, and got use of the driveway, but not the garage.

It was super frustrating, because the lease terms were such that we were responsible for snow removal and yard work, but WHERE THE HELL WERE WE SUPPOSED TO KEEP THE DAMN LAWNMOWER? The living room?

It didn't seem reasonable to me, but the landlord was adamant. We didn't last long there.

That's what I was wondering. I'm mainly concerned because, when I went to look at the home, I saw a car in the driveway and the owners were stopping by and getting their business things. There was a huge pile of junk and their dog was let out of the car and running loose on the property.

Was it annoying in your case, like were the owners always coming over at any time? Checking up on the place? (I live in an apartment now and so things are different). I lived in a townhouse 6 years ago and the landlord and I both used the shed, so no big deal in that case. Just wondering if that feels really weird--what if they're in the driveway behind me or need to get into it and I'm blocking it and out of town or sleeping or something?

It actually went beyond that, which was one of the chief reasons we moved out. During the 1.5 year we lived there, they decided to renovate the detached garage to add an apartment (for themselves) above it. The house was on a river, and they wanted to enjoy that. Which I can appreciate, but I didn't feel it was fair to rent us the house before plans for reno's were made, and then during our tenancy, surprise! This is happening, like it or not! There were work trucks in the driveway (which we were expressly leasing), the owners regularly parked us in, there was equipment set up in the backyard (that we were leasing), they built a 2nd story deck off the garage that felt like a watch tower, etc. It was an awful and frustrating experience, made worse because they acted like they couldn't understand why we were annoyed.

[Deleted]

You had me at "1915 bungalow" and "I can pay cash." I'd say as long as you're committed to owning the property long term, and think you'll be able to rent it in the future, go for it!

[bunch]

I'm guessing that since you mentioned mls that you like the house better than similar ones for sale, not that you just happened upon it being for sale when you looked to rent it. If so, I'd definitely do it. I imagine it would be nice to keep your monthly expenses low since your monthly budget is a little tight.

I might be way overstepping here, but I'm guessing that making this leap solo is a extremely difficult and I wish you all the best. I'm not shy about being a big fan of home ownership. My property investments have made me a lot of money and while a little uncomfortable jumping into, have really been pretty low risk. Find a good agent and go for it! Good luck!

[Deleted]

I think this sounds fine, provided you are in an area you plan to stay. This is Pittsburgh? Does that mean you moved back home by family? I thought you were in FL but I recall your family was from somewhere else (I don't remember where, I'm just guessing from your follow up above!).

I might consider taking out a mortgage, too, if this would drain your savings. I assume you have good credit and can make a nice down payment so your mortgage rate should be very low. I would think that might ease some of the financial strain/what if stuff since I'm guessing the mortgage payment will be low and you could always dip into your savings if you had a rough month or something. Unless you are keeping all of that savings liquid and not earning any interest on it, I guess.

Would you HAVE TO have a roommate or would that just be a way of making this more manageable? If you think it would be too tight without a second person living there, I might give more pause since a) roommates are a PITA if you don't find the right one and b) roommates can also be unreliable.

[kwynn]

Dec 26, 2012 14:58:01 GMT -5 tacom said:

The idea of buying a 100-year-old house on a smaller income makes me really nervous. I'd want to know the mortgage, taxes, state of the roof/furnace/foundation, and exactly what's going on with your savings situation before I could say yes or no though.

I left it vague on here on purpose, but I realize it doesn't help to give a good answer.

I will delete this part , but just throwing this out there:

To rent this house, it would be $600/month plus utilities. I would have a roommate. I budgeted $1000/month on rent max plus utilities. So my share would be $300/month plus utilities. I currently pay $670 a month and average $100 in utilities, so I pay right now $770/month. I can make it fine, it's not great, but it's okay.

The house is listed for 51k. I haven't even taken a really good look at it yet, still deciding if I even want to pursue this house at all in any fashion, rent or buy.

If I put 10k down, my payment would be about $400/month on a 10-15 year mortgage. Property taxes run about $100/month. My roommate would be paying $300/month plus utilities. Or I could put down any number of things, from 3.5% down to pay cash for it, that would all depend.

My net worth (if I get life insurance) is $770k, of which $60k is liquid and the rest is invested for me. Business money is separate.

I'd have to have inspections done completely of course.

Not sure if that gives a better picture.

I get bummed thinking I'll never be able to afford to own and will always have the expense of renting every month, never having a paid off expense like a house. I know it's so hard on a low income, but I hate moving and rent is my biggest expense every month.

[bunch]

The added details make it a no brainer to me.

[kwynn]

Dec 26, 2012 15:07:47 GMT -5 @buckybells said:

I think this sounds fine, provided you are in an area you plan to stay. This is Pittsburgh? Does that mean you moved back home by family? I thought you were in FL but I recall your family was from somewhere else (I don't remember where, I'm just guessing from your follow up above!).

I might consider taking out a mortgage, too, if this would drain your savings. I assume you have good credit and can make a nice down payment so your mortgage rate should be very low. I would think that might ease some of the financial strain/what if stuff since I'm guessing the mortgage payment will be low and you could always dip into your savings if you had a rough month or something. Unless you are keeping all of that savings liquid and not earning any interest on it, I guess.

Would you HAVE TO have a roommate or would that just be a way of making this more manageable? If you think it would be too tight without a second person living there, I might give more pause since a) roommates are a PITA if you don't find the right one and b) roommates can also be unreliable.

I don't *have* to have a roommate...I don't have one currently. But it would free up my budget---without a roommate, I'm really tight on money, and utilities in the north are higher. Without a roommate, my places to rent are really very limited at $500/month or so. I love living by myself but it does get lonely sometimes.

My sister is going to be my roommate. It is hard to find a good one, but she needs to reduce her expenses too. She also works for me in my business from home. She will probably buy her own place in about five years.

I'm living in Florida now, but my parents and in-laws live in Pittsburgh, so that's where I'm moving back to. The houses I talk about above are both there. So even if I don't stay forever (I plan to stay for the foreseeable future, but then again, we planned to stay in Florida for the next 10 years and look what life threw my way), I have family in the area that wouldn't make it an impossible rental.

[kwynn]

Dec 26, 2012 15:07:47 GMT -5 bunch said:

I'm guessing that since you mentioned mls that you like the house better than similar ones for sale, not that you just happened upon it being for sale when you looked to rent it. If so, I'd definitely do it. I imagine it would be nice to keep your monthly expenses low since your monthly budget is a little tight.

I might be way overstepping here, but I'm guessing that making this leap solo is a extremely difficult and I wish you all the best. I'm not shy about being a big fan of home ownership. My property investments have made me a lot of money and while a little uncomfortable jumping into, have really been pretty low risk. Find a good agent and go for it! Good luck!

I was hoping you'd weigh in! This house reminds me of your blog a bit. And like you, I'm in a lower cost area.

You aren't overstepping---it's so scary to do this by myself. It's not a dream home, it's a starter home, and I always worry about getting screwed.

I loved the other place with the detached garage, etc, but it would be double the price to rent. But that's a someday home for me...

I was trying to tell my sister "I know this girl, well, I don't know her, I met her on the Internet, but she has done flips and rentals and they were low cost and smaller homes and..." My sister all gave me the side-eye, like "Someone on the Internet? You don't know those ppl...you talk to strangers on the Internet?!"

I was all, "Her name is, uh, bunchanumbers..." and then I just let the topic drop because I sounded so stupid trying to explain chit chatting about money to people on the interwebz.

[Deleted]

Given that your roommate is your sister, I think that's a no brainer too. As long as you are both realistic that eventually she'll want her own place and one or both of you may want to live with other people eventually, I think that's a roommate situation I'd not hesitate to get into. You know you can live together, after all!

[Deleted]

The details make me much more comfortable with this. But I have 0 experience in real estate so take my approval with a grain of salt.

If the inspection checks out and the neighborhood is decent enough where you can stay or find reliable renters, this sounds like it could be great! Can you get an estimate on utilities too so you can plan for that?

[dr.girlfriend]

It sounds like a reasonable option to me, assuming the inspection shows no big problems, etc. The one thing I would say is, lack of a dishwasher, crappy porch, even just one bathroom -- those are really minor problems that I would just deal with. I'm sorry to say this and it's going to come across as tactless either way, but until you have the life insurance money in your hand I would not count on that as income. I know someone whose husband died of a heart attack and she is still being dragged through court to get his life insurance. Just go based on your current income, and save up for any big repairs that may crop up. It sounds as if you'll be fine either way.

[bunch]

Dec 26, 2012 15:27:02 GMT -5 kwynn said:

Dec 26, 2012 15:07:47 GMT -5 bunch said:

I'm guessing that since you mentioned mls that you like the house better than similar ones for sale, not that you just happened upon it being for sale when you looked to rent it. If so, I'd definitely do it. I imagine it would be nice to keep your monthly expenses low since your monthly budget is a little tight.

I might be way overstepping here, but I'm guessing that making this leap solo is a extremely difficult and I wish you all the best. I'm not shy about being a big fan of home ownership. My property investments have made me a lot of money and while a little uncomfortable jumping into, have really been pretty low risk. Find a good agent and go for it! Good luck!

I was hoping you'd weigh in! This house reminds me of your blog a bit. And like you, I'm in a lower cost area.

You aren't overstepping---it's so scary to do this by myself. It's not a dream home, it's a starter home, and I always worry about getting screwed.

I loved the other place with the detached garage, etc, but it would be double the price to rent. But that's a someday home for me...

I was trying to tell my sister "I know this girl, well, I don't know her, I met her on the Internet, but she has done flips and rentals and they were low cost and smaller homes and..." My sister all gave me the side-eye, like "Someone on the Internet? You don't know those ppl...you talk to strangers on the Internet?!"

I was all, "Her name is, uh, bunchanumbers..." and then I just let the topic drop because I sounded so stupid trying to explain chit chatting about money to people on the interwebz.

Ha! Next time you can refer to me as Lauren My first house was a 3br 1ba and I purchased it for $51,500. I have purchased 4 more since, 2 of which we still own - one as an adorable rental that generates $600/ mo in income right now No regrets at all.

[kwynn]

Dec 26, 2012 16:17:30 GMT -5 dr.girlfriend said:

It sounds like a reasonable option to me, assuming the inspection shows no big problems, etc. The one thing I would say is, lack of a dishwasher, crappy porch, even just one bathroom -- those are really minor problems that I would just deal with. I'm sorry to say this and it's going to come across as tactless either way, but until you have the life insurance money in your hand I would not count on that as income. I know someone whose husband died of a heart attack and she is still being dragged through court to get his life insurance. Just go based on your current income, and save up for any big repairs that may crop up. It sounds as if you'll be fine either way.

Yes, I've heard of this--I've heard it can be a huge pain and I'm so sorry for your friend's loss I wasn't going to apply but did at the urging of several ppl as life insurance money just makes me feel so gross, you know?...without the life insurance I would still have 370k saved that we saved up as a couple. I don't really want to touch any of that money of course.

When you say you'd deal with the little things, like crappy porch, only one bath--would you ever consider fixing them? I don't want to let any place I own get too run down--I thought I'd fix stuff slowly as I could afford it and do so modestly.

[bunch]

Is there any chance you'd send me the link? I'm super curious.

[CloudBee]

If it's a one bedroom, where would your roommate sleep?

I think it could be a smart move, but I'm not sure I would pay all cash. I would look into paying half in cash and financing the rest. Then pay it off in a year or two.

[dutchgirl678]

I would not rent a place where the owners would still use the detached garage and/or workshop. Buying a small house and having your sister as a roommate sounds like a perfect solution provided that the house passes inspection. When I bought my first house I knew it was not my forever house either but I still owned it for 5 years and then sold it at a profit. I'm sure with the current market you could sell it at a profit down the road or as you said rent it out.

My husband is a transportation engineer and so traffic is one thing he is always looking out for. Where is it related to the church? Does the church have a big enough parking lot or will there be overflow parking on your street?

Good luck and I know you'll do great .

[kwynn]

Dec 26, 2012 17:29:19 GMT -5 CloudBee said:

If it's a one bedroom, where would your roommate sleep?

I think it could be a smart move, but I'm not sure I would pay all cash. I would look into paying half in cash and financing the rest. Then pay it off in a year or two.

Two bedroom I'm cheap, but not that crazy to make my sister sleep on the floor or something.

Lauren, I'll send you the link

Peggy, the house is so cute in the snow---when it melts, you can see the stairs are a bit rickety and the bannister is busted a little. The church parking---my parents go there, I'll ask them.

[kwynn]

lauren---sent you a PM.
peggy, I want to be your neighbor

[spunkarella]

Dec 26, 2012 15:12:23 GMT -5 bunch said:

The added details make it a no brainer to me.

Put me in this camp. I think it sounds like a smart decision.

[hannamaren]

I have no expert opinion, but maybe check how long it has been on the market. Long time, maybe question it?

Otherwise, sounds great. And I like the sister for room-mate. You have lived together before.

[IrishBelle]

I agree with the others and think you should by the house. It sounds perfect for what you need and with your sister as your roommate, you can easily afford it without draining your savings.

[kwynn]

Dec 26, 2012 21:06:24 GMT -5 hannamaren said:

I have no expert opinion, but maybe check how long it has been on the market. Long time, maybe question it?

Otherwise, sounds great. And I like the sister for room-mate. You have lived together before.

Been on the market 255 days...many houses for sale in the area but 255 is a bit long.

I'm going to at least schedule to take a look at it.

[minzy]

Dec 27, 2012 4:29:01 GMT -5 kwynn said:

Been on the market 255 days...many houses for sale in the area but 255 is a bit long.

I'm going to at least schedule to take a look at it.

Maybe you could get it a bit cheaper than the asking price since it's winter now and it's been sitting so long. I agree with the others that it sounds like this could be quite doable and a good thing for you at this point in your life. Good luck, kwynn!