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Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127815  
Subject: Re: To Buy or Not to Buy Date: 2/4/2014 6:51 AM
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Recommendations: 29
Moon,

You are looking to bite off a chunk that has a good chance to choke someone who is experienced in all you speak of. Housing is an experience that is generally entered into in stages. You don't go from crawling to running a marathon overnight.

Let me see if I got this right:

You have never owned a home.

You are just coming out of debt and enjoying the lower stress that comes with having some money in the bank.

You started looking at properties in the $200K range.

An extreme fixer upper, a gut job, the property of a friend of a friend, is available at $325K+$100K rehab costs. This property is only in an "OK" area, but up and coming. Slowly. (Supposedly. Many things can derail this.)

You would need half your Roth for down payment, and at your low income would not be able to afford the loan on your own...would need to go in partnership with a friend.

Water and electricity is $1500/mo!!!

"I don't want to get into a situation where I feel overwhelmed and over my head. On the other hand, I do know that if I stay in my current place, then I am not going to be able to grow and develop in the way that I want to. "

With all due respect, run away, run away fast. It will be enough of a shock owning a home that you buy in good shape. Do you have an emergency fund, because surprises happen all the time, even with the best of buildings, and you will no longer have a landlord to fix them. IT IS NEVER A GOOD IDEA TO GO INTO A HOME PURCHASE WITH IT OWNING YOU, much less a fixer upper which you can not easily place on the market. Sorry for yelling, but that needed the emphasis. Rehab often costs twice as much as one expects, and takes twice as long. Sounds as though even if this comes in at it's projected rehab costs, it's over your head.

If this seller has only been getting low ball offers, that tells you what the market is. If they indeed need to sell, then they need to lower their price. Having personal ties to these people, going into a situation that you don't understand first hand with a friend who is also tied to these people, is an excellent way to lose friends. Guarantee that if you buy it from them and it works out well for you and your friend, they will resent you for having taken advantage of them. That is the best scenario.

What makes you think that this property will even qualify for a mortgage in it's given condition?

Go back to your comfort zone pricing of $200K, if indeed you qualified for that amount, or consider renting a home with the characteristics you desire. You did talk to someone about qualifying for a mortgage, right?

Baby steps.

IP
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