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Advice on buying a home
My father has recently offered to sell us the property we are
currently living in. I have lived here since I was 19 (DH moved in with
me when we were still engaged), and I have rented the house from him
and done business with him with absolutely no issues. He would draw up a
contract that we would both sign that would state how much he is
selling it for (we are getting the house appraised), how much we will
pay a month, and that if something should happen to him before we pay in
full, he will forgive the debt and the house will belong to us. It is a
2 bedroom, 1 bath house with about 3 acres, a pond with a dock, woods,
and our own well. He is planning to sell to us for about $30,000,
depending on the appraisal. We have done business together before, and
my parents and I have a great relationship, so I am confident he will be
fair.
The issue: the house is not in the best condition. My grandfather built it himself back in the '60s, so the house is a bit old. It is going to need a new roof, and we would need to put new siding on the house. The structure of the house is in good condition, so we would just need to sheet rock and paint, and put down flooring (like tile, carpet, or hardwood). The kitchen needs a little updating and we would want to eventually add on an extra bedroom and bathroom. For what we would want, it would be about $50,000 to fix up the place total.
Although this is ultimately up the DH and I, I just need a little guidance. I am extremely new to the world of home-buying and home-ownership and I am nervous that this will end up costing more than it would be to buy a home. I love the location and the property (it is a very beautiful area and I can see my children growing up here), but the house needs a lot of work. DH and I both have excellent credit, good jobs, and decent savings, so we could get a mortgage if we needed to, but this seems like a good opportunity if we could do this right.
I appreciate any thoughts or ideas.
**6.30.12** I have found the one whom my soul loves.
Re: Advice on buying a home
In addition to an appraisal, I would pay the extra out of pocket costs of doing an inspection. It may cost you $500.
Find a BBB highly-rated ASHI certified inspector.
S/he will spend several hours on the property looking high and low for minor and major concerns.
I wouldn't buy any home without doing one. It's prudent and it truly makes you an informed buyer.
I agree with the previous poster, get an inspection (ours for a 850 sq ft 2bd/1bath with a 2-car garage on a sixth of an acre was $275). There may be issues you don't even realize, and either way, you will have a much better idea of what needs to be repaired. The well/septic inspection may be expensive, so that is something I would look into. Sometimes inspectors cannot give you estimates on the cost of repairs, but maybe asking a contractor to go in after and give you some numbers on repairs or additions you'd like to do to make it your ideal house wouldn't be a bad idea.
Whether it would be more cost-effective to buy a different home really depends on the market in your area. In my local market, three acres with a 2 bed, 1 bath in livable condition for 30K in a desirable location would be a steal--even if you paid 50K in repairs while you lived there. Plus, there's a lot of sentimental value to the property. But if you're looking for a different number of bedrooms and baths, then I would definitely look at sold houses in your area or the neighborhood you'd like to live to see what your ideal house is selling for. The Trulia website might be able to help if you run a search on sold houses, sometimes they don't provide the # of beds/bath though.
If you aren't hesitant to do business with your family and you feel the same way about the house after an inspection, it sounds like a good opportunity to me.
sounds like a good deal to me. for what you want to do 50k seems a fair estimate. especially if you can do the flooring yourself. we bought a home built in the 30s and did a complete restoration. we went to different flooring stores. then quickly realized we could do it ourselves. we did our entire house for less than what ONE room would have cost having a professional install done. And flooring was probably the easiest to do. plus shop around. some of our flooring we found at lumber liquidators and a few other discount flooring stores. had we gone to the specialty store it would have cost 14 bucks a square foot. home depot had similar stuff for around 6 ...we but in a few different types of hardwood. all real hardwood same quality as the high end stores and only cost us about 3 bucks a square foot.
we used the internet a lot to shop around prices and it probably saved us 10k.
with the roof....i would really shop that around.
it seems like you have a firm grasp on what needs to be done, what you want to do with it, and how much it will cost. thats a good thing.
also you will become a home/land owner without the hassle most people have to deal with shopping for a mortgage. we got super lucky, we had a friend who did all that for us. we just filled out paperwork. but i hear nightmares from coworkers. not that they cant get approved but the constant back and forth.
either way. good luck. having your own home as an owner is a great thing.
I don't think you can put a price on the history or your attachment to a property. If you can buy it for $30K, fix it up for $50K, and have the prefect house for both of you and the house be worth the $80K investment in your market, then I don't see any issue with it. I think it could be so sweet to raise your family in a home your grandfather built.
Will you be able to live there long term? What would make you need to sell? Is there enough room for your to grow your family? Would it break your heart to sell it down the line? These are all things to consider.
I would get a home inspection done and hire a contractor to give you an estimate for the work you want to have done. You need real numbers here to make a good informed decision. You will be surprised how much of it you can really do yourself. At a minimum you need to consult with the following:
1) your DH. obviously he needs to be totally on board
2) a real estate agent. figure out what the market value (not appraised value) would be for this property and how it would work if you wanted to resell down the line.
3) A contractor. Have them walk through the house and explain what it would take to make it how you plan to have it... roof, addition, etc.
4) appraiser. higher your own by a referral from someone you know.
Best of luck!! It sounds like a good deal but no one on here can tell for sure!
Thank you ladies for the great advice! We have talked it over extensively, and have decided if the inspection goes well (we have someone coming out in a couple of weeks), then we are going to buy the house. It is an excellent deal for our area and we have already spoke to a few contractors that have made me optimistic. DH was already on board with the idea, but I just wanted to seek third party advice before I made any major decisions.
We would likely never sell (the land has been in my family for generations and it would devastate my family if I did), so we would likely rent if we absolutely had to move, in the event one of us had to work out of state or something, but we are both happy in our current jobs here.
**6.30.12** I have found the one whom my soul loves.