[carogers86]

Hey guys:

I need to consult the wise tribunal that is Off Topic. I am in the market to buy a house in California. I am currently living in a small one bedroom apartment paying nearly $1000 a month utilities and cable included. The max I can afford is $1780 a month (includes prop. tax, mortgage, house insurance). The realtor calculates that is a $250K house.

My game plan is to get a 5 bedroom house around 3000 square feet, live in one of the rooms and rent out the other 4 rooms for a TBD price ($450 minimum). Believe it or not, these prices exist just south of Sacramento in decent neighborhoods. 85% of the houses I am looking at are bank owned. The realtor has sent me a list of 90 or so houses that are AROUND the specs of what I am looking for. Some of the houses are either 4 bedroom (but sub-$200K) or 4 bedroom (1900-2200 sq feet).

Out of the list of houses about 3 are exactly spec. When it comes to getting the best price, do you guys have any suggestions and tips on how to negotiate? Any nightmare stories you can share so I can avoid? Am I overlooking anything?

If I can get all 4 rooms rented out, I would be profiting ~$300 a month in rent. I financed my BMW and there were defiantly things I could have done better had I researched and consulted this forum or the 335i. (Bought crappy warranty, one bent rim, no oil cooler, two different tires, bought car with check engine light on ((didn't know what exclamation sign meant)), etc).

[Brey335i]

Just bought my house a few months ago...

Make sure you know what you;re doing having people live with you. We've had a renter for a while now and she drives me insane...

Do your research on the other houses in the neighborhood and what they sold for. Then lowball. It's sad to say, but it's the best way of getting a good price. We got this house for $80,000 less than listing because the bank was desperate to get rid if it...

[jlspeed29]

I purchased a home last year here in socal...
low ball like fuck...the realtor will scare you and say we dont want to loose this house if we low ball....so be ready for that..


my next home I will not seek a Realtor to represent me...instead find the house you want and communicate directly with the seller representing the house...unless its bank owned...then you are likely to get a good deal...you must and i repeat must have all of your shit straight..i mean credit, downpayment, and all that stuff....
we had to show lots of proof....for our home and both my wife and i have high 700 FICOS and plenty of $$ in the bank...

take your time
do your research

good luck

[Brey335i]

+ 1 have your s*** in order...

also, if you buy with cash then you have huge negotiating power

[Blake]

get a good inspector.

[carogers86]

All good ideas. I have all my papers straight. Never thought about talking directly to the distressed seller.

[Freakazoid]

just make sure that YOU'RE aware that you're walking into this assuming the best.

First off finding a house like this just time, follow the suggestions above.
But secondly, and most importantly (depending on your financial situation). Finding FOUR renters, especially *good* renters can be very very hard to do. 4 renters means 4x the chance of finding the jackass who destroys your place, or can't afford to pay you rent...or a self justified prick who wants to take you to court for everything. I'm assuming this is a single kitchen, single washroom, single everything else area. Finding 4 renters who ok sharing that between 5 people can be difficult as well. If the area demands that little in rent, also don't forget you're not going to be able to justify paying much to get much in terms of security deposit and 'safety money' (first and last months rent, etc). What this means is that a renter can REALLY destroy your house, thousands and thousands of dollars, and you'll only recoup $450 (generally security deposits aren't too much more than one or 2 months of rent).

Not saying for you NOT to do it, just be aware that you might end up sitting on the place either not rented, or barely rented for many months. Make sure you've thought it all through, being a landlord isn't always what it's cracked up to be.

[Freakazoid]

Originally Posted by carogers86

All good ideas. I have all my papers straight. Never thought about talking directly to the distressed seller.

be careful as well with this, my constant recommendation is always buy your FIRST house with a realtor. Get to know what to expect in terms of paperwork, deadlines, etc. THEN branch out on your own.

There's LOTS and LOTS of ways for you to get screwed if you walk into these contracts having no idea what to expect.

And if you have a realtor who thinks he knows better than you, screw him, YOU control him, YOU tell him what to do. Any time I've dealt with a realtor, they've always said I've been lowballing...funny how the lowballs offers still get accepted though, eh?

[PKL]

Originally Posted by Brey335i

also, if you buy with cash then you have huge negotiating power

Not necessarily true. The only positive to "cash" is that you can close extremely quickly.

To some sellers, many sellers, it wouldn't make a bit of difference whether you are paying with cash or a loan so long as you are in good financial standing.

[PKL]

I just listed my apartment for sale here in Brooklyn for $550k, and I paid more when I bought it, I will lose money.

I'm moving to LA, and I'm going to rent for a few years to figure out where I like living the best.

Then hopefully buy a smallish (3bedroom) single family home somewhere in Los Angeles for $800k-$1mm

[chinoxs203]

renting out 4 of your 5 rooms, i dont think you will be that happy with 4 random people living in your same space. there goes your privacy, security and you will be inevitably sharing (shower, kitchen, toilets), for just an extra +-300 bux. try and find something a little more separate, basement apt and rent to one person or a couple for more. You may not make money but it will take a huge chunk of your mortgage while your still have your own space.

i just bought my first house a few months ago and i would recommend a good realtor who will work for you and show the ropes of home ownership. The seller should be paying your realtor so why not have someone on your side to help you out in a 400k purchase

[Brey335i]

Originally Posted by PKL

Not necessarily true. The only positive to "cash" is that you can close extremely quickly.

To some sellers, many sellers, it wouldn't make a bit of difference whether you are paying with cash or a loan so long as you are in good financial standing.

This is true, but at least here in Texas, sellers in this area generally love the idea of getting the money early.

Especially if it's a bank foreclosure and the bank just wants the money now.

[NBRider88]

Originally Posted by PKL

Not necessarily true. The only positive to "cash" is that you can close extremely quickly.

To some sellers, many sellers, it wouldn't make a bit of difference whether you are paying with cash or a loan so long as you are in good financial standing.

Main reason cash is a big positive is because loans are harder and harder to make with all the guidelines and laws constantly changing. It is a reassurance the transaction is going to go through with cash, but when financing, loans have a big chance of get canceled/not accepted etc...30 days down the road.

[ellipsis212]

Originally Posted by Brey335i

+ 1 have your s*** in order...

also, if you buy with cash then you have huge negotiating power

buying a home with cash is extremely rare.

but still, bringing a suitcase full of $100's to each appt lets them know you are serious. what lets them know that you are even more serious is that you have cutouts in the bricks of hondos for 2 platinum-plated Desert Eagles with your name engraved in them.

this will buy you some negotiating power.

[ellipsis212]

Originally Posted by Freakazoid

Any time I've dealt with a realtor, they've always said I've been lowballing...funny how the lowballs offers still get accepted though, eh?

exactly, keep in mind that the higher the selling cost the more money they get in their pocket.

lowballing? that's b/c you're taking money out of their pocket.

[Sniz]

Use a Realtor unless you know all the ins and outs of real estate transactions, which i'm sure you don't. Make sure your Realtor is good and knows what the hell they are talking about.

To the guy that said talk directly with sellers, typically that wont happen as most if not almost all sellers that are listed on the MLS will have listing agents representing them and you wont be able to go around them. That varies by state but in most states the seller will have to sign an exclusive right to sell which gives the listing agent the forefront on contact.

Be smart, be careful, and like Blake said inspect EVERYTHING.

Cash really doesnt give you any more buying power unless you are in a multiple offer situation and the other buyers have shaky credit/financing.

Oh, and yeah, renting out a bunch of rooms in your house sounds all good and dandy but it WILL suck, trust me.

feel free to PM me, i've been a Realtor/Office Manager/Brokerage owner for a decade or so.

and now i'm leaving the business because it sucks lol.

Goodluck!

[Sniz]

Originally Posted by ellipsis212

exactly, keep in mind that the higher the selling cost the more money they get in their pocket.

lowballing? that's b/c you're taking money out of their pocket.

not true if your Realtor has his/her head on straight.

Your lowballing because your wasting everyone's time. If your honestly lowballing the offer doesnt have a chance in hell of being accepted.

think about it.

[Sniz]

Originally Posted by NBRider88

Main reason cash is a big positive is because loans are harder and harder to make with all the guidelines and laws constantly changing. It is a reassurance the transaction is going to go through with cash, but when financing, loans have a big chance of get canceled/not accepted etc...30 days down the road.

this is very true, the current state of Banking is terrible. No one knows what the hell to do. Dealing with financing these days is very very frustrating regardless of your credit.

oh, and in general do not use Mortgage Brokers. Use a bank, a good bank.

[NBRider88]

Originally Posted by ellipsis212

buying a home with cash is extremely rare.

but still, bringing a suitcase full of $100's to each appt lets them know you are serious. what lets them know that you are even more serious is that you have cutouts in the bricks of hondos for 2 platinum-plated Desert Eagles with your name engraved in them.

this will buy you some negotiating power.

LOLWUT? I hope this whole post was a joke....

Originally Posted by Sniz

this is very true, the current state of Banking is terrible. No one knows what the hell to do. Dealing with financing these days is very very frustrating regardless of your credit.

oh, and in general do not use Mortgage Brokers. Use a bank, a good bank.

Very true, banking is a real pain...and getting a loan through is hard right now. People with great credit, equity, and good income still have to jump through hoops to get a loan. It sucks. But I don't agree with you on the part about using a bank over a broker. Brokers still have access to the best rates available.... 90% of the time, you are going to get a better deal. The times when Brokers rape you have passed...more than 80% of them have already left the industry leaving only the the shops who know how to do loans correctly and fair.

[MisterSkiMask]

Originally Posted by Sniz

not true if your Realtor has his/her head on straight.

Your lowballing because your wasting everyone's time. If your honestly lowballing the offer doesnt have a chance in hell of being accepted.

think about it.

I don't understand the 'lowball' thing, its all about market value. The seller may feel that its a lowball, but a reasonable offer is a reasonable offer (maybe a little low so you can negotiate to market value).

My father-in-law came with my wife and I to look at some properties with us (considering a second home), and he kept say well you've gotta' off xx% less then they are asking. Of course I said well you could still be offering way more or less than market value, what they are asking really means nothing if they really want to sell.

[greycrx87]

be careful out there, I bought a place thinking it was a bargain few months back( the place was 120K more in 2007) and now similar places are selling for 30% discount..prices are coming down every months like crazy..at least here in the city of Chicago

[MisterSkiMask]

Originally Posted by greycrx87

be careful out there, I bought a place thinking it was a bargain few months back( the place was 120K more in 2007) and now similar places are selling for 30% discount..prices are coming down every months like crazy..at least here in the city of Chicago

Indeed, look for comps and look at comps over time to see what the market trend is.

I have been watching a particular market for a very long time, prices are the lowest that they have been for years, but they are still trending downward, and some bank owned stuff is starting to hit the market.