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 Post subject: Buying a new house - Advice?
PostPosted: Mon Sep 03, 2012 5:19 pm 

Joined: Mon May 16, 2011 3:36 pm
Posts: 120
Hello,

I don't want to start a half dozen threads with different specific questions and would rather just have one running for advice/help. (I have put the LLC thing separate as it may get complicated, and also i think it will be a good thread to refer to in the future for others, since I couldn't (at least in my search) find anything related to it.)

So as for this thread, I am sure I will have questions as I go through the processes over the next month or two. I have researched a good amount on different aspects ahead of time (mortgages, realtors, home values, ect.) but still would welcome any advice i could get.

To start off, I live in Las Vegas, NV, I am looking 100k-175k (may go alittle higher if something catches my eye, but i can afford 20% down up to 175k, and am trying to avoid PMI.) I am looking for a single family home, which I will have a couple room mates for the first few years, and then figuring i take the plunge into marriage, I hope this house to support the early years of a family.

I am looking for any advice you may have, or things you were unaware of before buying your first house that may help me. A few questions I have right now that I am working on answering are:

-In short: My mortgage will be under 1k, and i have two room mates lined up that will pay me 500 each a month for rent (plus utility split.) Will I have to claim the money they pay to me in rent on my taxes?

-Although these two people should be solid renters (they aren't friends but previous co-workers and both professionals working solid jobs in their field, this are typically the recommended "someone you know, but not your best friend" category), should I have contracts written up for their living arrangements? If so, where should I look/start to get templates for these? Can I have them sign it just them and me, or do i need someone else present (attorney/notary/ect)?

-I am about to meet a Realtor (working with my bank to find one qualified through their program.) From this point, how long does it usually take to get from this point to closing on a house (I know this will very "depending", but just your experience.) Note: I have not tried for pre-approval yet.

-When, and should I, get pre-approved (or try I should say.)

I would like to say thank you ahead of time for any assistance you all can provide. As I stated, I will try adding new questions or follow ups I have in this thread just that I don't start multiple threads on a single subject. Also, any resources you might think that will be useful would be appreciated. I am looking to hopefully own a house within the next month or two, as I want to get settled in before the holiday season.


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 Post subject: Re: Buying a new house - Advice?
PostPosted: Mon Sep 03, 2012 7:06 pm 

Joined: Mon Feb 07, 2011 6:33 pm
Posts: 1146
Location: Illinois
Quote:
-In short: My mortgage will be under 1k, and i have two room mates lined up that will pay me 500 each a month for rent (plus utility split.) Will I have to claim the money they pay to me in rent on my taxes?

Yes. You may also get to take various deductions and depreciate the property, which can turn into a positive tax wise.

Quote:
should I have contracts written up for their living arrangements?
100% yes. Having a written agreement can solve a variety of problems before they even start, and makes it a lot easier if things go bad.
Quote:
If so, where should I look/start to get templates for these?
I'm sure you can find some decent examples online, but it should be fairly cheap for an attorney to draft up. It shouldn't take them more than an hour.

Quote:
Can I have them sign it just them and me, or do i need someone else present (attorney/notary/ect)?
State law dependent, but usually just all parties signing is sufficient. A notary signing won't hurt.

Quote:
-I am about to meet a Realtor (working with my bank to find one qualified through their program.) From this point, how long does it usually take to get from this point to closing on a house (I know this will very "depending", but just your experience.) Note: I have not tried for pre-approval yet.

Once you find a house and have an offer accepted, about a month is common. Mostly it will depend on how fast your lender moves. It also will depend on whether or not the seller is out of the house already.

Quote:
-When, and should I, get pre-approved (or try I should say.)

Now, or as soon as you are ready to start looking. The Vegas market is surely different from the market where I am, but Sellers often will want a pre-qualification letter before accepting an offer, or will require one within one week. If two similar offers come in at the same time, they are most likely going to with the offer from someone already pre-qualified even if the offer is a little lower.


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 Post subject: Re: Buying a new house - Advice?
PostPosted: Tue Sep 04, 2012 7:21 am 

Joined: Fri May 04, 2012 2:23 pm
Posts: 810
Just a few points to add:

-As a buyer, you can use any realtor you want. I would not limit myself to what your lender suggests. I have never heard (and I could be wrong) of a loan being contingent on which realtor you use. Unless there is some kick back or something, in which case, you should find a new lender.

-As a buyer, you do not sign any contract with a buyer's agent. If you don't like the person you get, find another one. Wash, rinse, repeat. A lot of realtor's will push you into buying the first place you sort of like. With this buyer's market, I would look at just about every house that comes close to fitting my criteria and within my price range. Our last realtor was excellent. We were relocating due to a job and it is difficult to get those stars to align sometimes. So we were feeling that pressure, we were going to "settle" for a place. Our realtor stopped us from signing and thought we could find something better. And he was correct!

-I had a landlord in college (college "slum" lord who made practice of taking deposits year after year) who's contract was the longest I have ever seen. Everything from no waterbeds, to no signs or flags on the house or in the yard to needing his permission to have people stay the night. And while he really didn't want a call if the roomies and I had any overnight guests, he did want to make sure we didn't move 20 other people in to dilute our rent. But, a lot of this comes with experience. I also, if I were to ever rent again, would invite the landlord for a walk through where I would videotape every little thing possibly wrong with the place (this is since my "dusty" fan issue, where a landlord stole $200 of my dollars b/c a ceiling fan was "dusty", to which my reply was, you installed the fan and the filters on the house, I just used the fan as it was intended - and it was dusty to begin with). This videotape is a good idea for landlords as well. I personally think it would be very difficult for me live in a home that I owned and be the landlord. I also think it would be difficult to be any type of landlord.

just my opinion.

_________________
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."


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 Post subject: Re: Buying a new house - Advice?
PostPosted: Tue Sep 04, 2012 8:25 am 
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Posts: 5374
Bichon Frise wrote:
Just a few points to add:

-As a buyer, you can use any realtor you want. I would not limit myself to what your lender suggests. I have never heard (and I could be wrong) of a loan being contingent on which realtor you use. Unless there is some kick back or something, in which case, you should find a new lender.

-As a buyer, you do not sign any contract with a buyer's agent. If you don't like the person you get, find another one. Wash, rinse, repeat. A lot of realtor's will push you into buying the first place you sort of like. With this buyer's market, I would look at just about every house that comes close to fitting my criteria and within my price range. Our last realtor was excellent. We were relocating due to a job and it is difficult to get those stars to align sometimes. So we were feeling that pressure, we were going to "settle" for a place. Our realtor stopped us from signing and thought we could find something better. And he was correct!


Indeed. I would use the list from the lender as a list of agents NOT to use. As a buyer there can be significant advantages to having a buyer's agent IF you are in a dual agency state. In some states every agent has a legal obligation to work on behalf of the seller. In those states the agent is always your enemy if you are a buyer so you should not trust anything they say that is not in writing and you should show no loyalty. If, however, you find a good buyer's agent, trust her and be loyal.

Just a minor comment though - in dual agency states you will have to sign an agreement with a buyer's agent. It is not an exclusive contract but it is something saying you understand the "agency" issues involved. To those unfamiliar, this seems like a contract.

When we bought our condo we found an excellent buyer's agent who did all the right things and did not waste our time. She quickly figured out what we wanted and showed us appropriate places, and only a few that were slightly outside our desires just to confirm she had things right. We found two "perfect" places and spent the next 3 months doing due diligence. I know this annoyed her but she continued to supply us information and so forth until we finally made an offer in the end. When we did she was very helpful guiding us in negotiating a very good price. So, don't be afraid to sharpen your pencil and do very thorough research on your own.



Bichon Frise wrote:
-I had a landlord in college (college "slum" lord who made practice of taking deposits year after year) who's contract was the longest I have ever seen. Everything from no waterbeds, to no signs or flags on the house or in the yard to needing his permission to have people stay the night. And while he really didn't want a call if the roomies and I had any overnight guests, he did want to make sure we didn't move 20 other people in to dilute our rent. But, a lot of this comes with experience. I also, if I were to ever rent again, would invite the landlord for a walk through where I would videotape every little thing possibly wrong with the place (this is since my "dusty" fan issue, where a landlord stole $200 of my dollars b/c a ceiling fan was "dusty", to which my reply was, you installed the fan and the filters on the house, I just used the fan as it was intended - and it was dusty to begin with). This videotape is a good idea for landlords as well. I personally think it would be very difficult for me live in a home that I owned and be the landlord. I also think it would be difficult to be any type of landlord.


Wow, we must have had the same landlord! On a serious note though, some of those things are illegal now, and may have been then. So, OP, you will want to be very familiar with your state's landlord-tenant act. Tenants can get triple damages for some violations that seem minor. I have college friends who successfully sued a couple of landlords for various things. I personally have never sued a landlord but I did have a property manager in tears once because I got her fired after very nearly having her arrested. The owner she was representing also ended up paying us about $2500 and giving us 3 months free rent because of her actions. Basically she tried to bully us when we actually knew the law! So just make sure you know what your obligations are and be prepared to fulfill them quickly.


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 Post subject: Re: Buying a new house - Advice?
PostPosted: Wed Sep 05, 2012 5:58 am 

Joined: Sat Jun 16, 2012 2:11 am
Posts: 192
Could you buy a family home in Las Vegas for $ 100.000 - 175.000? Sounds cheap! And, why would you want to rent a room in a (cheap) family home with two other blokes for $6.000 a year if you could buy one on your own for 16-17 times that, and have two roommates pay $ 1.000 a month to you...

Sound a bit too good to be true?

Where I live a nice family house is $400.000 - 730.000 but even so I wounder what a student would pay for a room and access to bathroom, wascher and kitchen... $360-400 is my guess. Just saying.


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 Post subject: Re: Buying a new house - Advice?
PostPosted: Wed Sep 05, 2012 9:01 am 
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Joined: Thu May 17, 2012 10:05 am
Posts: 1050
YoungGun wrote:
-In short: My mortgage will be under 1k, and i have two roommates lined up that will pay me 500 each a month for rent (plus utility split.)


I agree with Northern Light sounds a bit too good to be true.

I agree with Doinghomework you will want to be very familiar with your state's landlord-tenant act.

I agree with Bpgui have a written contract with the roommates with specific terms and conditions.

A few questions:

A) Are these friends or acquaintances? Also is $500 per tenant a bit expensive?

B) What does a typical 1 bedroom apartment run in Las Vegas?

C) Do you plan on asking the roommates for a deposit?

D) What will the length of the contract be?

E) What will be the terms if either party wants to break the contract?

From experience realize that tenants will not treat your house as their "home." Also, communication should be in writing regarding discrepancies for documentation purposes. You should probably save up a bit of the rent each month to go towards repairs, replacement appliances, new AC unit, new roof, etc. Living in a home that you own and are a landlord does present some challenges. Also, friends are not always the best roommates.

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 Post subject: Re: Buying a new house - Advice?
PostPosted: Wed Sep 05, 2012 7:15 pm 

Joined: Mon May 16, 2011 3:36 pm
Posts: 120
Northern light wrote:
Could you buy a family home in Las Vegas for $ 100.000 - 175.000? Sounds cheap! And, why would you want to rent a room in a (cheap) family home with two other blokes for $6.000 a year if you could buy one on your own for 16-17 times that, and have two roommates pay $ 1.000 a month to you...

Sound a bit too good to be true?

Where I live a nice family house is $400.000 - 730.000 but even so I wounder what a student would pay for a room and access to bathroom, wascher and kitchen... $360-400 is my guess. Just saying.


To answer your question (and sorta present an update) the range looks more like 140k-190k now. My mortgage would still be under 1k.

Las vegas has a huge difference between rent costs and home owner monthly cost at the moment. It also is very area dependent. A 3 bedroom condo rents out from 950-1.3k in the area i am looking for, and these usually don't have a garage, a yard, smaller kitchens, less bathrooms (1-2), and smaller rooms (as condo's generally have.)

I know many people personally that live in these areas and happily pay 550-600 for their split of a condo + split of bills. The two people looking to move in with me were in a similar situation and I told them about me looking at houses. They will get bigger rooms, bigger common areas, their own garage spots, and just the general benefits of a house (backyard, easier to host a party, ect.)

On top of all this, you also need a down payment and solid credit to get a house out here because houses are moving fast. A lot of people that are looking to rent don't have one or the other (usually down payment, but may not be in a great credit situation either.) Also, there could be the other usual reasons they are looking to rent, may not want to stay in the area for a long time, not sure where they are going in life, ect.

I know one of the two relatively well, he was a co-worker for a year at a previous job and we had a few classes together in College. He is looking for a new place with his brother. I met his brother, talked everything over, and we are on the same page. I specifically was looking for the happy medium of "I know you, but we aren't close friends, so we don't have to spend every minute together, and I won't have a problem taking action against you if I have to."

Onto Eagle's Questions:

A)See above, and see above.

B)in the areas im looking 700-900. Now note, just like most places, location is key in price. Its true i could get a cheap studio or bedroom apartment for 400-500 in certain parts of town. But these areas are deemed "not safe" by many, and the apartments are usually decades old and ran down. Also in my specific case, the area I am looking is close to both of their jobs (within 15 minutes) and was the area they were looking to get an apartment for 1150 together.

C) Yes, most likely $500 each, which will be refunded at the time they move out and the rooms have been inspected. I have discussed with them what is required of the room condition (basically look the same before and after, and I will be taking pictures before anything is moved in, and a HD video run through of the entire house.) This also will be written out eventually. (No, none will be "non-refundable" or "cleaning fee" as long as they return it in the condition found.)

D)This I haven't decided yet, nor have we really discussed. They are aware a contract will be needed, along with a deposit and how much rent will be, but this one part hasn't been set yet. Clearly it will have to be, I am thinking 9 months. The usual around the area is 10-12 months or more, but I am looking to be fair with them.

E) This isn't set in stone yet, but basically 60 days (two months) of notice, along with the rent for those two months (if they plan to stay in the room for those two months that's fine), their responsibility to find a roommate that I (the landlord) agree on. If they can't find a suitable roommate, then their deposit will be lost.

The Flip side, I would let them know 60 days in advance that I may have to have them leave, for X reason, and at that point they would have to move out. This is in the case if they have stayed recent with their payments without issues. Clearly if they stop paying rent or utilities there will be a different reprocution for this (probably going to include something in the contract that states missed rent payments will receive an official eviction letter and you will have to leave within 30 days, however, I need to look into state law on eviction processes.)

I do plan on saving some of their rent, or more so my paychecks. Essentially if their rent covers my mortage/property tax/HOA/house insurance (which it may just come under) then I would take what is not coming out of my pay check any more and divide it among a "home account" (much like I have set up now for my down payment), some will go to adding a 100-200$ every two weeks (i like the idea of biweekly payments, as my salary is this way), and building me E fund up more (I have a "sufficient" E fund right now, but want to slowly build it to be bigger to accommodate for at least a year of expenses at my new level figuring without room mates.)

I do plan on being very upfront with the roommates, we had a two hour discussion and we all seem to agree on most things, and appear that we will click well. I told them that when i drawl up the contracts that we will sit down together, discuss every page in detail, and clear up and confusion and make possible edits where needed. I am not looking to be some scum lord, or pull one over on them. They are helping me, and I am helping them, is how I see it. So I should be thankful for their assistance in helping me pay for my first house in the first couple years.


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