The Super Official Homeowners Thread

[Sijray21]

So I have the idea running through my head:

Get out of college, and start building assets as early as I can. Forget the fancy cars and bars every weekend, let me put money into something that will pay me back 20 years down the line. 

I am looking around at prices and homes, and thinking maybe buying in the Alexandria, Arlington, or Falls Church area would be the right move. I want a property Ashburn-esque, meaning the neighborhoods, schools, etc will keep expanding even if that's not for another 5 to 10 years out. I have no real price in mind yet, but I wanted to get your advice.

1) Going in on this with someone else. Finding someone who can also put down money on a downpayment means we can pay less interest, potentially get a more expensive property, split costs of any repairs, and split monthly mortgage. But it also means splitting the profits, and the decision making for repairs, tenants, etc.. We already briefly talked about buying with a high downpayment (30% of value), but I'm sure there might be a lot of headaches when doing this with another person.

2) Buying a fixer-upper or getting something that's already in good condition. I've had my fair share of binging HGTV, and seeing what's possible with renovations. But I don't have the knowledge to look at a house and estimate the cost to renovate a certain part of it. Do any of you have experience with this, and can speak to whether it makes more sense to buy a house that is already good to go for the most part, or getting one that needs a little TLC.

3) Getting my VA real estate license. This seems fairly quick, easy, and cheap. For a summer's worth of spare time, and around $300 I could have my license to buy/sell, seemingly eliminating the fees on my end at least. This 2% could be $8k saved, so I don't see why not. The only thing brought up by Jay was that the real estate agents can help you from buying a mistake house, something I couldn't necessarily do but would hope to do with ample research and inspections.

4) What to expect in monthly costs. Are there any good programs/websites you use to estimate the monthly costs of buying a house. I'm quickly realizing there is a lot more to consider other than the purchase price and percentage rate. Things like HOA, property taxes, etc that will be billed monthly. What is your rule of thumb? Not to have all of these costs combined go over 30% of your gross monthly income?

5) How did you decide on where you wanted to buy a house? Did you look at city plans for the next 10-15 years of highways, shopping centers, zoning plans, etc? What are some key considerations for your neighborhood and proximity to certain landmarks like metros, beltways, etc.

6) Tax heavens to look into for home ownership as well as mortgage payments. I'm sure there are things for first time home buyers, and many little ways to save money here and there.

Here's something I found in my 5 minutes on Zillow: https://www.zillow.com/homedetails/3215-...2087_zpid/
Seems like one where the neighborhood might be something that holds the price back in the long-run. Maybe I'm looking at it wrong though?

1) be really careful with that one... you could wind up paying a lot of legal fees if things go poorly (and they likely will over time). i wouldn't want to do this and even some people who are married don't do this for the risk of future divorce and it being a mess. tread VERY carefully here.

2) a fixer upper is a great way to get equity early. a buddy of mine bought a house 5 years after college after he was able to save for a good downpayment, fixed up his foreclosed former squatter-home, and made a good amount of equity. he also had a father-in-law who was a contractor and was a former real-estate agent. it's a lot of work and it won't be worth it unless you're really doing all/most of it yourself. there are some things you won't be able to do yourself (foundation repair, water laterals, sewage lines, etc.) and they cost a TON. stick by the motto, "buy the worst looking house in a nice neighborhood" and you could be ok here.

3) i'd avoid this unless you actually want to sell homes or are just interested in real-estate. RedFin agent fees are pretty cheap (1%) and you probably want a good agent for your first home as there is a lot of risk and you'll likely not have a lot of money to cover significant repair costs if you encounter them (unless you have family help). I had a NWFCU promotion where if i attended one of their free classes for buying a home i could use their home-buying program and only pay 1.5% as a buyer agent fee (3% at close, but a check reimbursement for half of that). Check for these types of promotions and offers.

4) It may not seem like it when you crunch the numbers, but 30% gross is really cutting a thin line, IMO. My current mortgage is about 16% to 20% of my take-home pay and i feel that's fairly comfortable. My first mortgage felt tight and that was close to 30% of my take-home pay. i also have no other debts (no student loans, no car loans). That allows me to save, still spend on nice things, vacation, and cover most expenses without worrying about other things. I still don't invest yet (i don't consider contributing to an IRA investing), but that'll be on the table soon. Other home costs: utilities (electric, water, sewage, internet/tv), hoa, taxes (could add hundreds of $ per month based on the assessed value each year), repairs, appliances, renovations, furniture, outdoor care, supplies (toiletries, cleaning supplies, tools, etc.).

5) i decided to buy because i didn't want to be forced to move every year, else paying about 10-15% more per year due to landlord lease increases; i wanted stability as i moved 8 times in my first 7 years after college. I rented a Townhouse with friends and i was walking distance to work; i miss that. I only put 5% down on a standard mortgage because i asked the loan officer since i had good credit (820+) this was not an offer they publicized. I was engaged when i bought the house, but i bought the house based on ONLY my income at the time. My wife and I did look at future expansion, but by the time we were looking the home prices were already reflecting the silver line metro expansion. we bought in 2012 when the market was about the lowest it's been in a decade, which was another factor in wanting to buy. Interest rates were low (although they dropped more from 2012 to 2014 when the forecast projected rates to rise a bit at the end of that range). Proximity to the W&OD trail and various avenues to get places without using I-66 was a goal. The tech expansion west toward Leesburg was also a factor. A home in a heavy residential area, Fairfax County Public Schools, and with a 2-car garage was a goal as well; we got all of those. The other Goal was to stay under $350k, but we settled for slightly more at $365k. We still have more house than we need, but we really like it now and have grown into it nicely. Refinanced 2 years ago to get out of paying PMI, to add my wife to the mortgage and property paperwork, and to reduce our monthly payment to make things more comfortable with kid expenses anticipated. We've also put in quite a bit in repairs, renovations, and other maintenance items. i almost forgot to mention. We looked for a home that wasn't renovated, but was move-in ready. We wanted to do renovations later down the road when we had money saved to make it our own and also raise the value of the home. We hired out the full kitchen reno 2 years ago and hired out the conversion of our screened-in back porch into an enclosed sunroom (extra room, essentially adding 250-sq*ft) with the money we saved and will tackle the bathrooms next. Loan to value went from 95% to approximately 62% in 7 years; i'm happy with that.

6) i'll let other tackle this one, but i didn't heavily factor the tax shelter from interest.