Young First Time Home Buyers - Are We Thinking Clearly?

[Chango]

Originally Posted by TheEarthBeneathMe

It's too late to renegotiate but I'm wondering what others think of our plan. My wife and I are in our early 20s, make about $65,000 combined, and the house we will be closing on soon was listed at $75,000. The accepted price we agreed on is $72,500, and we will be getting a $1,000 credit at closing towards some repairs. The house was appraised at $75,000, which was a surprise since we thought we saw it appraised 2 years ago at low $90,000's.

Here's the bulk of what the inspector noted:

* Older layer of lead paint, chipping in some areas (the most recent non lead layer) and needing a new coat.
* Radon level at 5 pCi/L
* small area of suspected asbestos tiles in the basement and attic
* Rusted sewage pipe (visible, easy access to) needing replacement - our biggest concern, first to fix.
* Roof with about 3-5 years of life left.
* 30 year old furnace, but with some parts replaced and actually working pretty well.
* Some window frames will need to be replaced due to cracks, water damage, etc. Some just need a new layer of paint, and rust to be removed.

Here's our thinking - it's a cheap house. The mortgage payment will be easily taken care of by just what one of us makes in less than a week. We plan to be able to pay off debt, and start saving for the more expensive areas of town. We want to get the house paid off asap, and continue schooling (which will give us approx $110,000 combined once we're done and employed).

Looks like we're going to be paying more in repairs than what the house is worth (new roof, furnace later, windows, etc) - but...is it wrong that neither one of us are bothered by that? We love diy projects, will get to enjoy/use whatever upgrades we make (kitchen cabinets, space saving bathroom sink, etc), and we will get the experience of actually doing it.

I should also mention there's an odd floor plan, which works well for us and will allow space for a baby in the future, but it may definitely have a limited appeal once it turns time to sell or rent it (another idea we're considering).

The reasons we like the house are:

* Location (very close to hospitals we want to work at).
* Nice, new deck and big fenced in back yard (we have dogs).
* Good area in a small city with a low crime rate.
* Floor plan works very well for us.
* It will get us on our own and out from living with my wifes family!

So..what do you guys think? Are we forgetting anything, is our thinking not realistic, do we need to watch out for anything...?

Also, houses in the area go for approximately $60,000 - $120,000.

It sounds pretty safe to me. I bought my house at 200K on a 60K/year salary (my wife doesn't work). I didn't have any other debt though...

[Chrisk327]

the only concern I would haveis sinking significant money into a house that you're saying has a quirky layout. if you fix it up real nice and you still have a house with an unappealing layout, you're not going to increase your value much. The roof, painting, plumbing and elctrical updates cost the same whether the layout is a winner or loser.

[chet everett]

Originally Posted by Chrisk327

the only concern I would haveis sinking significant money into a house that you're saying has a quirky layout. if you fix it up real nice and you still have a house with an unappealing layout, you're not going to increase your value much. The roof, painting, plumbing and elctrical updates cost the same whether the layout is a winner or loser.

It is not that I would NEVER recommend spending big dollars on "infrastructure" of older home if those dollar had a liklihood of coming back to you in a big way, but when the house is NOT in the desirable part of town and is "quirky" where prices range from $65k to $120K and you ALREADY want to move to the PRETTY PART of town, that is not nearly the same thing as saying "we found this house that COULD BE A GEM, are we nuts to be investing in it"??? If the investments make the house worth double what you spend that MAKES SENSE, this sound much riskier....

[TheEarthBeneathMe]

Whats considered overspending on this? Bought for $72,500, getting $1,000 repair credit, appraised at $75,000.

I guess im not really looking at this as an "investment." I see it as a cheap, starter house that i dont expect to get much financially out of. I dont expect to get 90k or so at the end, but i dont expect it to be a money pit either (i dont think it is).

I just see it as a place where we could live comfortably, live cheaply, get ourselves into a better position and then someday say bye to it and get whatever we can for it.

I guess i should also say the home warranty is through American Home Shield, and that we just got notice our loan was approved and to expect closing moved up to later this week (a week early), so...its happening!

[texdav]

Not knowig whewre the house in laocted many of thsoe items might be refaltive of the lw 75000 askig pirce and part of buying a older home.Doesn't coud that bad as to maiten ance needed. Actaully the window frame are more a sign that the home may not have gotten much maintemance lately. The asbestos tile are not serious.the sewer if the entire line was checked not that bad indicting a older hone with castiron pipes which are quiter than PVC .That also is a good price if other comp at that level and should keep it value high compared to what you paid. Congradualations.

[khuntrevor]

My 2009 assessment (by law, fair market value) was 95,500. I paid 22,000 in 11-09. I can look in the mirror and see why it is now assessed at 23,500 for 2012. Your mileage may vary.