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We have been living in this rental for a year and half. The home is owned by a family that has moved out of the area and purchased a home in their new location. The LL owns this home free & clear and it has been a rental for over 15 years.
The home was built around 1900, has no foundation and needs some serious updating (new plumbing, later additions to home needs new sub-floor, zero insulation in most of the home, etc). We have been looking into buying a fixer, so this does not deter us. The home is well located near downtown and university and is a very unique property in itself.
We are self-employed and have recently started this new business. We have stayed out of debt both personally and in the business. We have good credit and if we were looking to a traditional mortgage we could have co-signers if needed. But because we have been told that this home will not qualify for a bank loan because of the foundation, we are wondering if asking the owner to carry the papers might be our best option. We have approached the owner about selling and she seems open to it.
What kinds of things should we be prepared with when we have a sit down with her next week?
We are ready to have her run a credit check on us, she didn't run one when we rented.
Should we have a realtor give us an estimated value first, since the owner hasn't even been to the property in over 10 years and has no clue what condition the home is really in?
She threw out $140,000 when we asked about buying before, but the tax appraisal is for $114,000. What is the general difference between the tax appraisal price and actual home value?
In many places, tax appraisel and selling price have no relation. I think an appraisel is a good idea, also a home inspection to see what else you don't know about the house. There are loans available for fixing up a home but I can't remember what they are called. You might have some city problems if the addition was not permitted. You will be required to bring everything up to code.
You need to know more about the value and the condition of the place. Southern called. I would get an appraisal first and if still in the ball park of what you can afford/consider fair, then get an inspection to find out what is needed. Even if you are willing to take on a fixer-upper, you still need a good, detailed inspection report.
Actually getting the house insured with a pier and post foundation (what I assume you have when you say you have no foundation) is often the problem which is why you may have a hard time getting a loan on it.
Are you planning to jack it up and put a continuous foundation down? If not, then it would be hard to sell in the future.
The house has no post and beam, block, rock or other type of foundation. It is straight wood on dirt. And has a downhill slope to prove it. We do plan on getting an estimate for a unfinished basement concrete foundation if we were to buy. The house would only have one legal bedroom without a new foundation and I imagine selling that in the future would be difficult as well. I will look into getting an appraisal done as soon as we can.
The house has no post and beam, block, rock or other type of foundation. It is straight wood on dirt. And has a downhill slope to prove it. We do plan on getting an estimate for a unfinished basement concrete foundation if we were to buy. The house would only have one legal bedroom without a new foundation and I imagine selling that in the future would be difficult as well. I will look into getting an appraisal done as soon as we can.
I don't think I've ever seen a house that sits literally on dirt. You'd need to get a really good deal because it won't be insurable so if it burns you lose the whole thing.
You didn't say what part of the state you are in. There aren't a lot of houses for sale in Boise right now, but you can still get something relatively nice for $140k. Most of the rest of the state (with a few notable exceptions, like Sun Valley/McCall) you can get something very nice for $140k. I wouldn't pay more than bare ground price for a house that sits directly on the dirt and is sloping as a result. I would definitely have it appraised so you know a fair value, and inspected, so you know exactly what you'd be in for, before agreeing to anything.
And for an owner carry, I strongly suggest you get a real estate attorney involved, so you don't get taken advantage of. For example, most of the time on an owner carry, the interest rate is higher than usual, because it is due to the fact that the buyer can't qualify for anything else. But in this case, the opposite is true, you could qualify fine, it is the house that can't qualify, so I would want the interest rate to be lower than normal.
Oh, and the "fix it" loans are 203B. Look into that, if you really want to go forward on the property.
You seem like a great find....people who pay their bills on time and don't live on credit. I have to ask why in the world you would want to buy this home, when in fact you have been buying it all these years for the owner. Nothing but problems for this house down the line....the only person who could possibly hold a note for you would be the owner. Pay for a "master appraisal" on your own, present the findings to the landlord. If she won't sell to you, hold the note at a reasonable interest rate at the appraised price, move on. She will probably glean less $$ than she would if you stayed a tenant.
Sounds like the house may be worthless and value is in the land/location.
Unless you planned to tear down and start over, why buy this house?
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