Home Buying in 11572>Question Details

Nicole, Home Buyer in Long Beach, NY

Im 24 and im currently looking to buy something. I know there are a lot of foreclosures out there and i wanted to know if this was a good idea for

Asked by Nicole, Long Beach, NY Tue Feb 23, 2010

me.

Also ive been looking mostly at condos. Is it a better idea to look at two family homes and rent one of the floors?

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11
Paul Garrett’s answer
If you are considering a foreclosure, be prepared to do work as most of them are in need of repair. A legal 2 family is a good idea if you need the income to supplement part of your mortgage payment, but you will also have the responsibilities of being a landlord. Unlike either of these two options, a condominium is another option that you have if you want less responsibility as far as maintenance goes. It’s a great time to purchase with low prices, low rates, and the tax credit in effect so as long as you know what's involved for each choice, you can’t go wrong with an investment in real estate. If you qualify for the tax credit, you must be in contract by April 30th. I wish you the best of luck in your search.
1 vote Thank Flag Link Tue Feb 23, 2010
Bank owned properties / REO (real estate owned) properties can be usually be bought at or below market value, thus being a good buy. Some of these properties are renovated as the banks understand that this will enhance the timeline of the sale. However, it is not the norm and you should be prepared to do renovations on your own. Still they are very much worth looking into. The second part of your question is regarding condo verse two family purchase. Apples and oranges, my friend. The risk factor with the two family home is that your mortgage payment does not change when your apartment goes vacant. You must be able to carry the payment even if the unit remains empty for several months. The condo is more of a care free lifestyle with a turn key effect. The square footage for the two family apartment and a condo might even be the same depending on the buildings. Both are "real property" with real ownership qualities. Happy House Hunting!
0 votes Thank Flag Link Wed Feb 8, 2012
Condo;s come with nore costs and Foreclosures are not always the best buy on the MLS, Go talk with a Realtor and let them know what you want to do and how much you wish to invest!
0 votes Thank Flag Link Thu Jul 28, 2011
Foreclosures aren't always easy. They are as-is property's. If your looking for a great buy and your not in a rush to purchase, maybe you should look more into short sales, most of the time the homeowner still lives in it and you can get a better look at everything. Some short sales are an incredible deal. Sometimes they shock me on what they accept. A condo or co-op can go both ways. You have to take into consideration you have taxes and maintence, sometimes that can end up close to a small house that is completely yours without so many regulations and more of your own privacy. Good luck with your decision.
0 votes Thank Flag Link Thu Jul 29, 2010
Hi Nicole,

I first want to commend you for thinking of your future with the perspective of today's real estate market which offers many opportunities for first time buyers. Since your question was very general and not enough information about you was offered you have been given many different answers and scenario's relating to your future purchase. And let me say that all the answers offered below are excellent and diverse. Because of this and the fact that I don't know more about you personally and financially I'm not going to give you any direct real estate advice.
I do want to offer advice that helps make your decision easier. As a young person you probably don't have much real estate experience unless you have a relative in the business. Answers to the questions you have asked are both practical and emotional. Surround yourself with people who have the experience and whom you also trust. Start with family and friends who already own property. Ask them what they think about your plans and what their experiences have been as home or property owners. Try to find someone who has both the experience and knows you very well. REO's are very frustrating and full of pitfalls, can you handle that and who knows you best to let you know. Rental property can be very time consuming and often leaves you without income for periods of time, can you handle that and who knows you well enough to let you know. You may be mature for your age but it doesn't hurt to have someone watch your back.
When you find someone your comfortable with and can walk you through the process you will need professionals to keep you safe. Talk to agents. Let them know your goals and ask for their advice. Then work with the person who seems most knowledgeable and who your gut tells you, you can work with.
Very important............find a mortgage professional and get pre-approved for a mortgage. You may find that you have credit issues which need to be resolved. Or, you qualify for one mortgage program and not another. You need to know these things NOW, before you settle on a property. Additionally a mortgage pro will tell you about the different mortgage programs available to you and what you need to do to qualify.
You will eventually need an attorney at the closing. MAKE SURE YOU FIND A REAL ESTATE ATTORNEY! Most attorney's will say they handle real estate. But unless that is a large part of their practice they may not fully understand the nuances that can kill a deal at closing. Ask your relatives or friends if they have a real estate attorney they know and trust. Call a couple of them. Tell them what you intend to do. Ask for some advice and let your gut tell you who to work with.
These are the people you should rely on even before you buy something. Feel comfortable that someone is in your corner and feel comfortable because of the knowledge you have accumulated........they call it due diligence. There are many opportunities out there right now. Do your homework and go for it.

Allen Bauman
Century21 Yve R. E.
Licensed R. E. Agent.
NYS Certified Residential Appraiser
allen.bauman@gmail.com
516-791-3846
0 votes Thank Flag Link Tue Feb 23, 2010
Anytime is a great time purchase you receive annual tax benefits.

If you want become a landlord rent part of property great income however many peaks and valleys some love or hate based on type of tenant you have as a resident.

If you are 1st home buyer best be qualified now with executed contract prior to 4.30 therefore you can qualify for the $8k tax rebate.

Lynn911
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Tue Feb 23, 2010
Look at both and see what fits your needs best based upon price, condition and location. Find a local Realtor to work with and leverage them to find properties that meet your criteria. Good luck.
0 votes Thank Flag Link Tue Feb 23, 2010
Hi Nicole,

Buying a foreclosure may be a great opportunity for you, but it comes with risk. Many foreclosures are winterized with no electricity, heat or running water which makes it difficult to inspect properly. Banks also make no representations as to plumbing, roof, c/o's etc. You buy them "as-is". If you have family or a friend who is a contractor or plumber have them help you with your decision. You may need a 203K loan to buy one. Speak w a loan officer about that.

A condo or co-op certainly may be more affordable with less risks. You will need at least 10% down (some buildings require 20% down) payment. A condo will have taxes and monthly maintenance. A co-op will have higher maintenance which will include the taxes. Factor that into your monthly payment budget. My main concern for a young home buyer (with 80-90% financing) on a condo/co-op is if you out grow it, the value declines and you have little or no equity. Will it cash flow if you rent it out? (and can you rent it?). You can usually make a house bigger if you out grow it, but you can't in a building. Of course my concerns are based on assumptions (financing, out growing, and future values) that are just that, assumptions.

A 2 family has pluses and minuses as well. Built in income is nice, and if you are financing the property the bank will usually add 80% of the expected rental income to your income to qualify. There are several types of 2 family c/o's, here in Nassau county, so make sure your attorney does his due diligence.

There are great opportunities out there, just be careful and get good council.

What ever you decide, good luck!
0 votes Thank Flag Link Tue Feb 23, 2010
Hi, Nicole,

You are better off with a condo. The maintenance of a condo is traditionally
more economical than owning a home. If I were you, I would look to invest in a condo
and Long Beach is a great place to make that investment.

Good Luck.
Camille Dandola
0 votes Thank Flag Link Tue Feb 23, 2010
nice advice to buy presandy in a flood zone
Flag Tue Jul 9, 2013
Your age is not the main issue, but your business inexperience very well could be.

If you have deep pockets for a 24 year old and good business savvy, a real estate owned (REO), also called a bank owned property, might work out for you. I would suggest working with a broker who specializes in these properties (I do not).

But the problem with REOs is the possibility of unexpected costs--hence those deep pockets. You also need a lot of patience, as odd things can happen in these deals. I speak from personal experience, as I bought an REO in June 2009.

From a financial planning perspective, I would recommend no less than 50% down on whatever you buy. Being slave to a mortgage is no fun, especially for someone who might want to travel, get another college degree, etc.. But, if your job is high paying enough, or if you have assets from your family to draw upon, your situation may suggest a more relaxed approach--and interest rates are still excellent. But if you can swing 50% down, and still have money in the bank to cover housing expenses and a six-month emergency fund for yourself, then I think you can buy and sleep very well at night.

As far as condo versus 2-family house, in my opinion 2 to 4-family properties have many investment advantages for small investors compared with all other options, including single family houses and larger apartment houses. I think these size houses provide the best balance of carrying costs with returns for most middle class and upper middle class investors.

For an owner-occupant of a two family house, the advantages are clear. You only share walls with one other household, yet you get enormous help paying your mortgage, maintenance and insurance expenses. Also, the maintenance, taxes and insurance costs are usually only slightly higher than if you had bought a one-family home. These houses can also be sold to future owner-occupants, whereas larger properties are really only of interest to investors, usually.

Regarding a condo, you might want to research how well, or how not well, condos in Long Beach are selling right now, if that's where you're shopping. (I live in Long Beach.) I hope you are considering properties in Queens, because there is a strong bias, I think, here in Nassau County, for people who really prefer a detached property and a yard for the kids/dogs to play in.

Karla Harby
Vice President
Licensed Real Estate Salesperson
Charles Rutenberg Realty, LLC
127 East 56th Street, 4th Floor
New York, NY 10022
(917) 365-0876 cell and text messages
0 votes Thank Flag Link Tue Feb 23, 2010
The decision is entirely yours--what will suit your finances best--if buying a two family and one part isn't rented for a period of time can you carry the expenses. If you already haven't done so--why not visit with any qualified loan officer(s) first and see exactly what your budget can handle. Lenders have their income v. debt criteria for qualifying for the amount of a mortgage—oftentimes requiring that housing costs are not in excess of one-third of gross income in addition to a stipulated income v. overall debt-ratio. What lenders don’t know are borrowers’ non-debt spending habits, present and anticipated. You, the borrower, need to consider the economic factors of your lifestyle that would impact on your individual comfort level of affordability. A mortgage outside your budgetary constraints can dramatically alter your overall living conditions. So, be sure to factor micro and macro economic concerns into your mortgage amount deliberations. Again, a loan officer can best advise you.
0 votes Thank Flag Link Tue Feb 23, 2010
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