Due to the collapse of sub-prime lending practices and “bad” loans that were automatically serviced by more reputable commercial banks, the United States housing market has suffered greatly. Our incumbent President Obama entered his term with Congress having already introduced the “bailout” as a partial solution to saving major United States corporations and consequently, industries. The housing market has experienced an astronomical amount of foreclosures during this economic downturn. Accordingly, distressed real estate purchases present options for homebuyers that they might not otherwise experience, had the market retained most appraised home values/pricing.
A buyer with $150,000 cash has the option of purchasing a distressed property for well below the market value, which in this kind of market is much lower than 4 years ago, provided the foreclosure amount the “seller” owes is less than the market value. In other words, a buyer purchasing a distressed property would do well to bid a contract price over the defaulted mortgage loan amount to cover the bank-owner’s investment into the property. So, my first recommendation would be to find a suitable property with these kinds of purchase features: Distressed property value is greater than the foreclosed loan amount.
Then, I would bid on the home to cover the defaulted bank loan amount to close the sale. Should the distressed property purchase be made with perspective buyers with good credit, I would acquire a loan from a long-standing reputable commercial bank. Preferably, a low-interest fixed rate loan product would be ideal. However, if a variable home loan was the only option, I’d seek one with a fixed interest rate for at least five years, and make sure there were no balloon payments. If there were credit concerns, or eligibility for FHA or veteran loans, I would certainly use the advantages of those government funded loans. Additionally, if there were state or local housing homeowner purchase subsidies, such as First-time Buyer or lower income home ownership programs, I’d recommend the buyer seek these additional purchase funds, as well. Finally, I’d recommend seeking federal home improvement non-repayable grants to add as additional funds to purchase and enjoy a distressed property.
I would use a portion of the $150,000 to use as a down-payment on the property. Then, depending upon the condition of the home, I’d use a substantial down payment to hire fund developers to raise funds for the property. Why? Because going GREEN is the way to go. Green organizations and their environmentally friendly agenda would be advantageous to cost-savings throughout home ownership in the following ways:
1 Energy efficiency yields lower utility costs.
2 Green materials should warrant less repairs and home improvements, long term.
3 Most significantly, green...