Wow.
Just got off the phone with my real estate agent - after 6 months of hunting and 38 offers put in on various houses, I’ve finally gotten one accepted.
Now…wow. Now what?
We need to do some fixes on it - we got an FHA 203(k) loan, which gives us $35k above the purchase price to do improvements.
Also, the place is a duplex, and we’ll be renting out the back unit, so any tips on beginner landlording would be awesome.
Holy crap. This is actually happening.
Map out the shortest/fastest route to the closest Lowe’s or Home Depot. You will go there more times in the first month after moving in than you have ever previously entered both stores combined.
And buy toilet paper. Keep it somewhere readily available, because on moving day you will need it, and your current supply will be packed away.
Do not even think about section 8.
Run every potential tenant’s credit report, Do not rent to friends/family.
Oh, and congratulations!
Arrange for an Inspection asap. You’ll need to know if there are any unforseen issues before your option period runs out.
Congrats! I just became a home owner myself and it’s very scary - but great!
Also, if you buy a refridgerator from Sears, be advised that they do not come with the tube needed for connecting the ice maker. You have to buy that separately.
Congratulations, and welcome to the “Home-O” club!
What? Why is everyone giggling?
I bet they save that one for the last day of Realtor School.
Congratulations. Wishing you a lifetime of joy in your new home!
Take LOTS of photos of whatever is going to be upgraded through the 203(k) loan. Make sure your 203(k) consultant has previous experience with the program - the more the better.
If you’re renting, be very very selective. Don’t just let the first person to come along become your tenant. Call references. Set the rent at market price, not what you’re willing to accept. Tenants are not your friends. Friends are not your tenants.
Stuff will break. Accept it. Fix it. Don’t overdo it at first. I know it seems like it’ll be fun to install cabinets, plant a garden, etc, but it won’t be. It’ll be laborious and you’ll want to quit soon out of the gate. Do one thing at a time and don’t start the next part until you finish the first.
Make sure you know the landlord-tenant law for your state. Nolo Press has some good state-specific books with sample lease forms, etc. Find out your state law on security deposits (usually they have to be in a separate, interest-bearing account, and you may need to pay the tenant the interest) and what it’s OK to withhold from the deposit. Find out if it’s legal to charge a separate nonrefundable pet fee. Find out if there are state-mandated time limits for fixing major things that break (e.g., if the heat goes out, you may have only 24 hours to get it fixed or have to pay for a hotel for the tenants).
Good luck!
We bought under a 203k last year, and it was definitely an experience. Be prepared to be drived completely insane by the process requirements, and write EVERYTHING down. You will need a contractor - do yourself a favor and make sure the one you select has worked a 203k before, because if not, you will have a hard time getting them to understand the payment schedules and inspection requirements.
I because something of an expert - going so far as to spend a few hours with a HUD administrator in order to provide feedback on the - IMHO - outrageous process a 203k mandates.
That said, it was an excellent way for us to maximize the house we were able to purchase, and one year out we are able to refi into conventional at better terms.
Feel free to PM me if you want more info or have questions, I’m happy to help!
Anna
Can you elaborate on the section 8 caution? Genuinely curious here. I’ve heard that while section 8 is a hassle paperwork-wise (though I don’t know the details), at least the gummint usually pays its share in a timely manner.
Other advice sounds pretty darned good.
taking lots of notes
For those who had a 203k before - how did you find your contractor? My real estate agent and my lender are both first-time 203k, so I’d like at least one of my professionals to know exactly what they’re doing with this!
On a lighter note, if you plan to do renovations (or regardless, really), take tons of pictures of your house and yard before you change everything. After a couple of years of working on it, you’ll enjoy looking at how far you’ve come.
Do any renovations for the rental unit as cheap as possible; tenants will wreck things, and you’ll be glad you didn’t put the expensive stuff in there. Clean and fresh is good.
Listen to what everyone has said about being a landlord here; they know what they’re talking about.
And get three guys if you hire a moving company. I cheaped out with two, and it took for-frickin’-ever.
I’m going to be a home-owner on Tuesday! We close next week! (Although we’re already living in the house… so…)
But yeah. Take projects one at a time. Last year I tried to completely re-do the gardening, including removing many, many bushes and perennials. I only got half-way through. Break projects into manageable sizes.
Congrats! There is no better feeling then being handed the keys to your new home. Take it slow and easy. I took care of the big things first like having a new roof put on and a sill fixed. Then the next year I painted it all by myself. I would not advise that. It came out great but it was a lot of prep and work. I was praying doing the peak on a cheesy aluminum extension ladder. I loved the writing off of expenses at the end of the year. Keep a shoe box for receipts for tax time.
Enjoy!