First Time Home Buyer? Be Smart.

No one can see into the future. But first time home buyers can be smart by knowing what should happen in the long term future.

We are in the middle of a real estate correction throughout most of the country right now and that leads to opportunity. Want an example?

Today I go to closing with a young married couple in their twenties. They were looking for a duplex to buy (smart move) because they wanted to live in one side and allow the other side to pay for 68% of the expenses. And they hired me to help them find such a place.

After evaluating the market and weighing the possibilities I ended up recommending to them a bank owned single family home. Why? The home was ugly inside and out. Peeling paint. Stained carpeting. Out dated lighting fixtures. Not up to snuff to most home buyers.

The home was priced at a place that investors didn’t like it because there is not enough room to rehab and sell. Home buyers didn’t like it because it wasn’t move in ready. But this couple liked it because a more thorough inspection and pencil to paper showed that after costs of acquisition and repairs they would be sitting with a 10% equity position, day one! Without figuring in their down payment.

There are other properties like this available in the Olathe School District and around the Kansas City area. Around the country, for that matter. If I were a first time home buyer I think I would follow this model. Look for something with a 10% equity position (more is okay) or a duplex.

2 Comments

Filed under Misc. Real Estate

2 responses to “First Time Home Buyer? Be Smart.

  1. Rebeccalev

    Great post Chris. I love this very specific example on how homebuyers can take advantage of this market.

    I’d love to see a follow-up post for those homebuyers that might have had less of a downpayment than this couple did.

  2. Chris Lengquist

    Rebecca – Thanks for stopping by.

    Actually, this couple only put down 5%. Those loans are still out there. Now, they could have put down literally 5 times that amount.

    The key is they had significant savings, great credit scores and steady employment for both of them.

    Yes, your credit matters again.

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