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Investors & smart moms: is this a bad idea?

Anonymous
Posted by Anonymous
  • 37 Replies

We're broke.  We live in an awesome area.  House values are great.  People don't leave this area.  There's a house in the downtown area, with a double lot and a nice big pole barn...for sale for $39,000.  Once it's brought up to date, it will sell for well over $100,000.  We are very handy.  DH can do almost everything-and what he can't do, his family and friends can.  I can do painting and demo.  

DH talked about flipping houses a while ago, but he was talking about doing it in the ghetto.  We have small kids so I wouldn't be able to help there.  But with this house?  It's on the sidewalk, on the 25 mph main strip there, in walking distance to parks, little shops, and the river we fish at.  So the kids can play while we get this done in just a few weekends.

But we're broke.  What do you think about taking out a personal loan to do this?  Do they have personal loans that you don't have to start paying on for like 6 months?  I've thought about going in on it with friends and family, but it just wouldn't work.

Posted by Anonymous on Jul. 31, 2013 at 8:58 AM
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Anonymous
by Anonymous 2 on Jul. 31, 2013 at 9:02 AM
Sounds like a good idea if you can get the funds. Be careful though they can turn into money pits fast. Also, there's always the chance it won't sell and you could get stuck paying two mortgages. I also don't think you'll be able to get a personal loan for it, you'll probably have to put your current home up for collateral.
highlandmum
by Spunky on Jul. 31, 2013 at 9:03 AM

 Not a good idea if you are broke.  Flipping houses can be a disaster.  With the $39,000 you need to remember you have carrying costs of the loan.  Plus you are going to need money for materials and labour.  You do not know what you are getting into until you open up the walls - you may have structural items that need done.  Plus if you plan on removing any load bearing wall, changing the plumbing around, changing electrical - things like this you need a building permit.  Also if your DH is not a registered electrician or plumber you cannot touch these items. 

What would you be planning on doing that will only take a few weekends?

Anonymous
by Anonymous 1 - Original Poster on Jul. 31, 2013 at 9:05 AM

I've wondered about that too; we have an FHA mortgage, and have lived here 2 years, but we have about $100,000 equity in this home.  We bought for $103,000...and our appraisal was for $258,000..before many of our updates.  So with it being an FHA, could we still use the equity for a loan?


Quoting Anonymous:

Sounds like a good idea if you can get the funds. Be careful though they can turn into money pits fast. Also, there's always the chance it won't sell and you could get stuck paying two mortgages. I also don't think you'll be able to get a personal loan for it, you'll probably have to put your current home up for collateral.



ElitestJen
by Ruby Member on Jul. 31, 2013 at 9:06 AM
2 moms liked this

Absolutely not.  They do not do deferred mortgages.  Once you close, you have approximately 30-45 days until your first payment.  Even if you can do all the work yourself, materials cost money.  Often more than anticipated. Then, what if it doesn't sell right away?  You're stuck paying the mortgage.  You're $40k-$50k in debt with another payment.

You need to get yourself secure before you start dipping into other potential money pits.

Anonymous
by Anonymous 1 - Original Poster on Jul. 31, 2013 at 9:06 AM

clearing out some trees, painting, carpeting...it hasn't been sold in a long time, and has been lived in, so that tells me the plumbing and electrical are probably fine.  Of course, I haven't been in there...I'm just wondering if it's even possible.


Quoting highlandmum:

 Not a good idea if you are broke.  Flipping houses can be a disaster.  With the $39,000 you need to remember you have carrying costs of the loan.  Plus you are going to need money for materials and labour.  You do not know what you are getting into until you open up the walls - you may have structural items that need done.  Plus if you plan on removing any load bearing wall, changing the plumbing around, changing electrical - things like this you need a building permit.  Also if your DH is not a registered electrician or plumber you cannot touch these items. 

What would you be planning on doing that will only take a few weekends?



ElitestJen
by Ruby Member on Jul. 31, 2013 at 9:07 AM



Quoting highlandmum:

 Not a good idea if you are broke.  Flipping houses can be a disaster.  With the $39,000 you need to remember you have carrying costs of the loan.  Plus you are going to need money for materials and labour.  You do not know what you are getting into until you open up the walls - you may have structural items that need done.  Plus if you plan on removing any load bearing wall, changing the plumbing around, changing electrical - things like this you need a building permit.  Also if your DH is not a registered electrician or plumber you cannot touch these items. 

What would you be planning on doing that will only take a few weekends?

Oh yeah, good points!  You need an intimate knowledge of all building codes in order to flip houses.

And OMG, mold.  Almost every older house I've ever seen has had issues with mold.


Anonymous
by Anonymous 1 - Original Poster on Jul. 31, 2013 at 9:08 AM

bummer...that's what half of me keeps telling myself.  But I've seen so many houses brought back to life, and the flipper making good money.  For years I've told dh it wasn't a risk I wanted to take.  And so we've missed a lot of chances.  


Quoting ElitestJen:

Absolutely not.  They do not do deferred mortgages.  Once you close, you have approximately 30-45 days until your first payment.  Even if you can do all the work yourself, materials cost money.  Often more than anticipated. Then, what if it doesn't sell right away?  You're stuck paying the mortgage.  You're $40k-$50k in debt with another payment.

You need to get yourself secure before you start dipping into other potential money pits.



highlandmum
by Spunky on Jul. 31, 2013 at 9:10 AM

 When was the home built?  If it was prior to 1950 it may have knob and tube wiring - insurance companies in my area charge a very hefty premium if you have this.

That reminds me remember if you do go through with this you will need to have insurance on the property as well.

Quoting Anonymous:

clearing out some trees, painting, carpeting...it hasn't been sold in a long time, and has been lived in, so that tells me the plumbing and electrical are probably fine.  Of course, I haven't been in there...I'm just wondering if it's even possible.

 

Quoting highlandmum:

 Not a good idea if you are broke.  Flipping houses can be a disaster.  With the $39,000 you need to remember you have carrying costs of the loan.  Plus you are going to need money for materials and labour.  You do not know what you are getting into until you open up the walls - you may have structural items that need done.  Plus if you plan on removing any load bearing wall, changing the plumbing around, changing electrical - things like this you need a building permit.  Also if your DH is not a registered electrician or plumber you cannot touch these items. 

What would you be planning on doing that will only take a few weekends?

 

 

 

Jennyanne322
by on Jul. 31, 2013 at 9:10 AM
Houses are not something to mess with. So often people but a house to flip and when they start gutting, they open up a can of worms. I don't recommend it if you can't afford to put tons of money and time into it. Plus you have to pay taxes up the ass if you don't have the home for more then 2 years.
purple_panda
by on Jul. 31, 2013 at 9:12 AM
Watch some shows on HGTV like Love It or List It and Property Brothers. Simply because a house has been lived in does not mean it doesn't have any serious structural, electrical, or plumbing issues. You don't know until you knock down those walls. What if the plumbing is rusting due to old pipes? What if they didn't properly install the electrical causing possible fire hazards? What if there are mold issues? Rotted boards?

I could go on but considering your financial state this is a terrible idea.


Quoting Anonymous:

clearing out some trees, painting, carpeting...it hasn't been sold in a long time, and has been lived in, so that tells me the plumbing and electrical are probably fine.  Of course, I haven't been in there...I'm just wondering if it's even possible.



Quoting highlandmum:

 Not a good idea if you are broke.  Flipping houses can be a disaster.  With the $39,000 you need to remember you have carrying costs of the loan.  Plus you are going to need money for materials and labour.  You do not know what you are getting into until you open up the walls - you may have structural items that need done.  Plus if you plan on removing any load bearing wall, changing the plumbing around, changing electrical - things like this you need a building permit.  Also if your DH is not a registered electrician or plumber you cannot touch these items. 


What would you be planning on doing that will only take a few weekends?





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