Some years ago I was browsing through the Classified Advertisements in Phoenix looking for something I could re-purpose for our apartment or good investment, like a car I could fix and resell. We were newlyweds and like most young couples, neither of us came from family money, even if we had we would have been expected to earn it. We were both energetic and willing to work a few extra hours or repurpose older furniture for new life. Interestingly enough I considered cars or things we could pick up at auctions as good investments. Buried in those classifieds I spotted, “Your dog needs a new home”. This caught my attention and it described a backyard, with grass (not desert landscaping so popular in Phoenix), a covered porch with shade, a huge tree and magnolias and a privacy fence. All described from a dog’s point of view.
My wife and I at the time were living in a 1 bedroom apartment, we were driving used vehicles but paid for one was a pass down from my parents a Pontiac Catalina that served its purpose well. We had been there a few months I had established work history and we began to discuss purchasing a house. I wasn’t the biggest fan of the Phoenix heat but had realized the importance of a place we could call our own and realized a house was a good investment. Buying and selling cars or repairing furniture would never get the same potential return as a house.
We located a Realtor in our church and soon the search for a first real and good investment a “home”was on. The market at the time had been struggling and there were many HUD foreclosure homes on the market. The Housing and Urban Development lowered the minimum down payment to only $500.00 to encourage a purchase of a HUD foreclosure. Given the state of economy and number of HUD homes available, a person might think buying one of these would be just a matter of making an offer, but you would be wrong. We were still young newlyweds and my income was sufficient to buy a house but it was understood we would have to repair and upgrade a property to stay in budget. We made offers on 3 properties within a month only to be turned away. Winning was not based on the bigger offer but the net after closing. Our offers always included the Seller (in this case HUD) paying our closing costs but when we made offers we had not really adjusted the bid taking this into consideration. An informed Realtor would have done their research and known this before spending a month chasing an investment.
Armed with this small tidbit of valuable information when we located our next investment and we calculated this into our offer. We had the Realtor look up some comparable properties and with this in mind we adjusted our offer taking in consideration the closing costs therefore increasing the net after proceeds to HUD and sure enough we had the winning bid. The value of an informed Realtor is immeasurable. A Realtor in a new home purchase can keep your emotions in check and negotiate at no cost to the buyer incentives, seller concessions and even lender credits.
I don’t recall where we located a lender for our investment. It very well could have been the classifieds where I found the dog needs a new home advertisement. Once we completed an application the next 6 to 8 weeks were spent going through seemingly endless request for documents, When we had met with our lender the first time they did not provide a list of items that would be needed for the application process or prepare us for any calls from their loan processes or underwriter. This was prior to high tech so each VOE (Verification of Employment) had to be walked in by one of us and then to make it valid it had to be mailed from the Employer after it was completed. There were 3 of these during the loan application. For those of you reading this take note of this fact, just because they VOE has been done don’t assume all is clear and change jobs or quit. There are multiple VOE’s done and the last one is normally done just prior to scheduled closing and often this is a telephone call to your employer. One of the questions will be,” Is employment expected to continue” ? A borrower’s income is the closest guarantee a lender can have the loan will be paid.
We moved into our home with a big pool that was mostly mossy water, dirt and who knows what else. Every wall had been papered from the 1960’s and every room had a different color of carpet but this was GREAT and we made it our home. Looking back in a short amount of time our investment became a HOME we were very proud of. We worked for what seemed like months cleaning up and doing upgrades within our budget. I recall my beautiful wife spending hours stripping wall paper from the block walls, sometimes an inch at a time. We lived in the home 4 years and I was transferred to another city and we turned this home investment into a rental. The economy did not get any better for several years and we held interest in the house until we sold it to another young family. We did not profit in the sale of the home monetarily but the house served as a tax write off for several years and we did end up living in it one more time for another year when I was transferred back to Phoenix. Looking back on the experience it was overall good for us. A house is usually the first large investment an individual makes and knowing the rules and getting experienced advice is wise. Our Team at Gustan Cho associates are well equipped to assist the first time home buyer or the seasoned home buyer, we can direct to a professional in Real Estate or work through credit challenges, we can even direct you towards a Credit Repair professional if necessary. The Larry Stepp Team at Gustan Cho Associates and I are available 7 days a week, holidays and weekends.
Larry Stepp 407-922-4755 LarryS.HomesNetwork@gmail.com