Home Sweet Home

​When it rains steadily, the sounds of the down pour on the roof and windows have a definite emotional sweet soothing affect and I am reminded of the origin of the language (home or house). Both terms have a Germanic origin that found their way into modern English that implies shelter of which stems from the verb “to hide.” And you do feel a sense of safety and security when you are hidden from the outdoor elements. Additionally, the use of the word “hides” as we know it means animal skin, thus an animal is at home in their own skin.

In this week's episode, a Harvard graduate with a degree in international finance gave us actionable steps in how you can acquire your first home. We talked about purchasing your first home for the price of a car. Is this possible? I am here to tell you that it is. In the 80s and 90s I invested heavily in property, all of which were below $40,000.00, but it takes due diligence to do so. In fact, you will run out of finances before you ever run out of properties to acquire.

Today, A vehicle will cost you $100,000 or more, depending on the make and model, and a home can be acquired below that price. Of course, we are not talking about beach front property, nonetheless, a home.

It is often that these homes have a great deal of deferred maintenance, however, as they say, if you have a good hat and good boots, in other words, a good roof and a sound foundation, you are in decent shape. The rest of the home can be brought up to par with a little of elbow grease, and you would be amazed how much a gallon of paint can do to change the interior and the facade of the home.

So, the question is, where can you find such properties?

My guest discussed several methods, beginning with the MLS and focusing on properties that have not sold, and there is always a reason. Auctions are another means to find these properties; however, it is often the case you are not permitted to inspect these properties before purchasing. I suppose you can get a drone to fly over several times to inspect the roof and the exterior, but they are riskier since you really do not know the extent of interior damage.

Then, there the REOs or Real Estate Owned by banks, and they are always ready to negotiate since they are in the business of finance and not real estate, and they are chomping at the bit to get these properties off their books.

Let me share with you what I know and what I have done no holds barred. Incidentally, strictly for educational purposes.

I would call local thrift finance companies to inquire if they had any foreclosed properties, and I was always astonished how readily they were open to negotiate. In fact, years later I still had a local CEO of a finance establishment thanking me for having relieved him from these properties.

Have you ever been driving around, and you spot a home that is unkempt or vacant?

This was another strategy we implemented, and again, it takes due diligence to find the owner and the specifics of the property itself and it can be done without even leaving your home. Everything is at your fingertips by means of the internet. Now, that you have the address, look it up on the county assessor’s website and it will give you from when the home was built, who owns it and their address and all the specifics of the property. Proceed to contact a title company, and they will provide you a printout of property values in the same neighborhood.

Drop the owner a note that you are interested in purchasing the home. Or work out a lease with an option to buy, allowing you time to renovate the home with the least amount of expenditure. Now, that I am thinking about it, there were many times I did not pay rent while in the process of bringing the home up to standard. From my point of view, make it is a win-win agreement for the seller as well. Make sure to allow yourself for murphy’s law, always have an exit strategy, in other words, have your financing in place to satisfy the seller or an interested buyer before the lease options expires, always be thinking ahead.

Here is one crucial caveat, make sure an attorney drafts the lease option to buy and the instrument should be recorded in the hall of records. This will prevent the owner from selling the property from under you after he is seeing the improvements you are making. Greed is a funny thing!

The next question is, were do I get the money?

There are more investors out there than you can shake a stick at! I had one investor that had put over six digits aside to support my investment activity and he was happy to do it.

If any questions, reach out to me and I will advise without obligation. Some may conclude that this is risky, however, I can argue that doing nothing in something that is worthwhile is much riskier.