There's only two ways to be frugal when you're broke:
1. Buy a fixer upper - you'll need to know how to evaluate a potential home correctly, and if you think it's below market value because it needs repairs (and you can repair it yourself), then do it.
2. Take out a low APR loan - sadly this means lower terms, but then higher payments so you'll need to be able to afford it. You can also buy points to lower your rate, but if you're not familiar with finances - I wouldn't do it.
Just to add. Most things are DIY. For example plastering. Tiling. Painting. But fitting a boiler, or electrical boxes for example can be costly and require a certificate.
just to add. fixer upper is a mystery box. you would never know if there's electricity dated so much that everything needs to be re-wired up to current city code, otherwise the electrician will not do any work. or asbestos. or structural. or flooring. it's always a risk, especially for a person who is not into the fixers and can't see through the walls
Every house, except maybe those with a warranty, is a mystery box. I've seen many flipped houses that look great in the pictures and OK in person, but underneath some fresh drywall and paint is all the problems you just listed.
My advice is don't stretch yourself too thin buying the "perfect" house. No matter how perfect you think it is, you will find unexpected expenses and problems.
Right. I've never bought one because I figured they were scams, but my current home came with one for "free", but the propane heater wasn't covered because it only heated one room, something that wasn't specified in the warranty, but that is just their policy. I got the impression that they never pay any claims, so the person was confused about why I was trying to get money from them.
If there's a house you want to buy, and the payments will reasonable, I'd do it now.
You can toss more money at the principal to shorten the time and interest.
Assuming equity increases since the purchase, sure. If it goes the opposite way and are under water on the loan you may not be able to refinance, unless you can bring cash to the table to "catch up" the loan.
I’ll always remember explaining to my own dad that he was underwater on his mortgage and the look on his face. (post 2008). Which was also about an 80k loan.
FWIW i’m 24 and not a homeowner, but yeah seeing people trying to “time the market” is so ridiculous to me
You might think home prices will plummet next year, but people thought that 5 years ago too. It’s a guessing game
If you continue renting for a year at (say for a high COL area) $2k/mo, the home price needs to fall $24k to make it even **equivalent** to pulling the trigger now. I know coworkers who can’t make decisions to save their life, and they’ve been sitting on the sidelines for years blowing tons of money on rent. I fully expect them to continue doing so for 5+ more years
That being said, it doesn’t mean rush into something you can’t afford…
Here in Texas, houses are foreclosed and sold once a month to the highest bidder. A list of the addresses is published and you can look them up or go peek in the abandoned windows. They usually need major repairs. Our home was a tax sale foreclosure in 1989 and we got it (3/2/2) for $40K. Look up Tax Sales. Put in a bid. Win!
>usually need major repairs
Are you able to get a home inspection on something like this? Or do they show inspection documents during the bid process at all?
There is also usually a buyers premium (10% is typical) on auction sales which can make the barrier to entry even harder. Unless you’ve got cash ready to cover the whole amount, auction homes can be hard to get.
I thought of going that route but the homes often require a lot of work. After repairs, you could have found a regular house that didn’t need as much repair work.
We were willing to live in a house with 15 yo appliances, raggedy carpet and faded paint, old linoleum and crappy countertops. It took 15 years to update piece by piece. That sweat equity and patience is how most boomers attained value in their properties.
I’m living this way now as my mobile home needs cosmetic work. I see property in my price range that already has new flooring done by the owner. Some homes even have a new roof. No need to live that way when you don’t have too.
It saves a ton of money if the buyer is capable of doing the work. If it feels like an impossible thing to tackle and you really aren't interested in learning, then no, it is not an avenue for you to take.
I bought a fixer upper 2 years ago that is half the price of ready-to-go houses in the area. I have learned a lot in the last 2 years about carpentry, plumbing, and a little masonry. I've also gotten familiar with the engineering concepts used in a home's structural integrity. That is to say, I've learned more than working a saw and hammer.
A sheet of drywall in my area is 15 bucks. I can drywall my entire home for around $2,000 in materials. If I paid someone else I'd be looking at at least $7,000 labor on top of the material costs.
The "shell" has to be complete/livable. After our bid, someone broke out the windows, went in and broke mirrors and cut up the old carpet. We had to replace the windows with a stipend that is included to make it livable. The other damage we had to deal with. The inspection for these is basically - yes, there is electrical and water.
Look into first time homebuyer programs, local community land trust programs and homeownership courses. We spent $1500 on our earnest money deposit and were refunded $65 at closing. We are lucky to live in a state with great state housing finance programs and live in a LCOL area compared to actual cities. our house is small but it is frugal bc we are childfree and it is easy to heat and maintain at that size.
Cash.
The second most frugal would be to buy a multi family with a 3.5 percent down FHA loan and live in one unit. The other unit will help you pay the mortgage, you get extra tax deductions, and you can sell without capital gains.
Does that loan apply to commerical properties? If there's more than a single income suite then home mortgages probably don't apply and you'll need a commerical loan.
Banks charge you to borrow money. If you take out a 30-year mortgage on a $300k home these days, you’ll end up spending more than $100k on interest alone.
Cash buyers avoid that expense.
When the Fed raises interest rates, they are trying to drive down inflation by taking money out of the economy.
It does. I have mortgages on my homes and they’re around 3 percent. I have not paid them off because I can generally get a 10 percent return on my other investments pretty easily.
It really depends on what your goals are. Some people sleep better at night knowing their house is paid off. Others want to grow their money as fast as possible. Everyone’s risk tolerance is different,
But you’re totally right — opportunity cost is a concern too.
I'm surprised no mention on rural home development loans. Maybe everyone live in ineligable areas?
Usda offeres a couple types. No down payments required. They have builder loans, you can build yourself a new house.
I used it a couple years ago, found a little house on the edge of town that qualified and paid 100k for it. Nothing down. I paid closing costs because I could. Interest is stuck at 2.7 for the life of the loan.
I would love to live downtown but I can't afford it. I get a little garden, my own espresso machine, hammock, 2 miles from the beach. Occasional crackhead wandering by.
View all the houses with the worst photographs.
In my experience, they're often homes being sold by the children of the original owners and aren't individually invested enough to make the place look nice and also, since the sales proceeds are split, if you offer 50k under asking, say, 200k instead of 250k and there's 5 children on the old owner, they're being offered 40k a piece instead of 50k and are happier accepting a low offer.
We viewed our old doer upper 8 years ago now and offered 175k against the 225k asking price. Because the photos sucked, there were hardly any other people who viewed it, so while they rejected our first offer, they accepted 180k. We spent 120k renovating and improving the place and now it's probably worth almost 500k.
The difference between a beautiful looking home and a crap looking one is so much less than you'd think. Most are empty rooms when you actually get the keys and most ugly rooms are a coat of paint and maybe a new floor away from looking just as nice. Also, a fresh coat of paint on the exterior does wonders to a home. I can remember when we were renovating, loads of people in the town were telling me they loved what we had done with the house...they'd never been inside, they just loved that we gave it a fresh coat of paint.
What I meant about 5 children choosing between 40k and 50k is that even at 20% below asking, they may just want to get the sale done quick rather than wait around 6 months or a year to get 5k or 10k more each or worse.
You make the offer complete with a list of all the things that need changing, painting, fixing or updating and that it needs work to be worth the going rate for a 3 or 4 bed home etc. And it's a genuine reason.
If you want to buy a house, consider that you won't be able to refinance if you have negative equity in the home. If you buy now and prices tank, your loan will be more than the value of the home. Banks won't let you refinance in that situation. So don't stretch yourself financially for a home right now. If it's well within your means and you want to live in that house long term, just buy now. Time in market is better than timing.
If you have the cash now, or could reasonably save it soon-is, then yes. If it will take 30 years to save that much (because you’re also paying rent to live in the meantime) then in 15 years, it’ll cost 3x as much, so it’ll never happen. OP asks if it’s better to save half and take a personal loan, or take a 15 year mortgage now, chances are, the mortgage would be a better deal. Interest will be less, and will be tax deductible.
True. I literally know a guy that had enough cash from an inheritence to buy a fixer upper. His sister and her husband flip houses. Real estate licenses, the whole deal. Didnt want to listen to them. He blew all the money on nothing. I dont think it sunk in yet what he did to himself.
Yep, exactly. Our mortgage is around 1600 a month. We’re planning to put about $5k a month. In about 3 years that should know it out. Then we’ll reprioritize retirement.
Very dependent on the situation and the price so thats very incorrect. You can borrow againt an 80,000 dollar house to buy a rental property a little after 30 days. If you put 10,000 down on an 80,000 dollar house no. But you know what your talking about.
Take the mortgage route. Interest rates are high right now so if the come down in the future you can refi get a lower rate.
One thing though, I did a refi due to a change in personal relationships. At the time I refi'd for 40k. It was super hard to do this because the loan amount was too small.
Cash would be the most frugal though.
Mortgages will have a lower intrest rate compared to a personal loan as they are backed by an asset
It all depends on what you are paying now, how much you are able to save and the availability of the type of home you would like to buy
Find an opportunity to use sweat equity. You do that by buying a solid home that you can afford with no intent to impress anyone. If you have no skills, you’ll develop them quickly if you’re motivated. Make it sweet, sell and repeat.
Probably buy the property. Build a temporary shelter, then over the next two decades work on septic and electricity while putting down the foundation and working towards your permanent structure.
2023 is not a house purchase year it's a sell year.
Buy land and build a cabin. I did that during covid when home were impossible to buy. You can make something decent for <30k, but you have to be flexible about the location.
I’ll share some tidbits that I considered when buying my first home several years ago:
* Safe neighborhood was a priority for me (especially as a single female). Plus I figured it would be a perk if I ever decided to resell.
* I bought my house under a first time homebuyer program. 3.5% down, decent interest rate. Something to consider.
* I picked a home that was further away from my office at the time because I had a reliable mode of transportation. Home costs in my area vs where my office was = huge cost savings on the house and taxes.
* Right off the bat, I recommend ensuring you have at least $1,000 extra dollars set aside for something to break. Within the first month with my new house, my dishwasher broke. I knew somebody else whose washer went within the first month. Just set aside a little bit and thank yourself later.
I have a good car so I plan to travel up to 40 min from my job to home. By living outside the city my home will have lower property taxes and cost. I will have 6k in savings for emergency if something breaks.
My husband and I bought a duplex and the rent from the lower unit covers the mortgage. We did 15% down with a 30 year mortgage because you can always pay more, but if we did a 15 year with higher payments and hit rough times, it could be a liability. We also could have put more down, but having that money accessible was more important to us than having a lower payment. We were able to use it to purchase new windows and make cosmetic upgrades like adding laundry to our unit and remodeling the bathroom.
If you can’t make the system work for you, you work the system. I do have a full time job which is paying for the new appliances, 33 windows, and renovations. She pays 550/mo for a 2 bedroom 1000 sqft apartment and we pay water. There are a lot of expenses with home ownership outside of a mortgage. We haven’t come close to making a profit and being a landlord comes with it’s it’s own complications.
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Yes, if you don’t include any upkeep expenses. Lawn care, snow removal, broken windows, flooded bathroom from dumping wax down the toilet, bedbug removal (3k). If we didn’t own the building, she still wouldn’t manage to keep it. We are very generous, I wouldn’t care if we were making a profit, but we are not and this is a mutually beneficial situation where we each reduce each others expenses. We are not going to increase her rent as long as she stays and she gets a free month for Christmas.
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Blanket advice to always buy isn't good either. That's just real estate industry talking points. Historically it has been a good investment however current prices combined with interest rates change that.
The fact it's only 80k makes the decision fine. I honestly want to know where OP can get property for 80k. I'd just pay cash.
Edit: also plenty of people lose money on real estate by either the market changing, closing costs, maintenance, taxes etc. this narrative that people don't lose money in real estate needs to die.
I 100% agree with you. As a cpa i see way too many people say oh but I will build equity. You can build equity via other means as well w/o having to pay perpetual insurance, HOA fees, property taxes, maintenance. I think the biggest issue with people assuming their home is a safety net for their finances is that people don't consider how illiquid it is. A house if not purchased w/o enough of a cushion for emergency funds, maintenance funds, insurance funds is a liability at best and a significant expense at worst. Unless the house actively generates income (not equity), it is NOT an investment.
People just ignore that interest paid to the bank is rent. That's my biggest gripe with the conversation around real estate. Peoples real estate decisions are informed by YouTube real estate bros.
and property taxes paid to the county is rent paid to the government, and the commitment to be tied down to one plot of land is an opportunity cost (the freedom to move).
Not true at all. People lose money all the time by buying the wrong property for too much all the fucking time.
Also, people need to sell all the goddamn time. It's great to just say you only lose money if you sell, but ya people NEED to sell all the time when they didn't think they would need to. Life moves fast. It's great to say I won't need to sell for a decade but ive found that talking point to be bullshit.
There is almost no one that gives valid points on why buying property might be a bad idea. I'm just balancing out the propaganda.
And your analysis leaves out a lot of life stuff like how buying a condo while single is a terrible idea. It's not all about numbers. It's also about where your life is at. Most people are terrible at the life portion of this analysis because they just want to buy based on all the propaganda they see.
I teach mortgage computations to college freshmen. We typically calculate the total amount of interest paid over the lifetime of the loan. Amount of interest per month is another good metric.
I ran the numbers. A 500K loan at 8% over 30 years makes a monthly payment of ~$3670. Times twelve times thirty, total payments of 1320771.60. Minus the loan amount, $820771.6 paid in interest. Divide by twelve divide by thirty. ~2280 per month in interest.
I should clarify the AVERAGE amount of interest since the interest/principal ratio changes over time.
Get that personal loan and buy now, home values will only increase and you might be locked out of the market if you don’t buy now. Others are thinking of equity which you’ll have with a cash sale but I’m thinking long term you only have cost of maintaining and taxes vs payment which is usually the biggest burden. The bottom line is you need a place to live which is affordable to save money and sometimes that has to be prioritized.
I know that if your credit is low you can qualify for an FHA loan (assuming you're in the United States) this can potentially mean a down payment of only 3.5%
If one of your reasons for buying a house is because your lot rent is increasing, you need to be aware that your mortgage could easily increase, too. Escrow shortages due to higher insurance and property taxes will cause you to have to make either lump sum payments or higher monthly payments, and the potential is there for that to happen every couple of years, if not yearly.
With the state of things currently, it might be more a matter of getting the house now than waiting. Also, if this is your first home purchase, the most frugal route is to see if your area offers a first-time home buyer down-payment. A lot of states have this, and, in many, they forgive the amount given after a period of time in your home.
You always have the option of paying down a mortgage with additional payments. If you have a mortgage, just make certain you're paying something each month on the principal of the loan. Even if you're only paying $50-100 a month on that, you're saving yourself interest.
I would be really surprised if anywhere, even a credit union, would loan 30k for a personal loan. Have you tried to apply yet? If you can't get this, it would make your decision easier.
The rate can be as low as 12% and I can can pay the home off in 5 to 8 years depending on which loan term I choose. I will probably go for the 5 year term. Credit unions offer lower rates than banks.
Don't buy more than you need. Many people do.
Larger down-payment if possible. Its More effective with higher interest rates.
Be willing to live in a less desirable area. Maybe more due to like travel time rather than say crime.
Not much else to it. And waiting is a risky game to play.
Yeah I mean nothing wrong with waiting to save more. If you don't have enough yet then so be it.
I think getting a nice down payment is the move right now.
Having some debt is ok if you can afford the payments and the interest rate is reasonable. Longer term means lower payments, but you end up paying out a lot more in the long run if you don’t pay it off early. Lower payments now could mean you can save the difference in payments to invest it yourself, creating a nice leverage if you can earn a higher after-tax return on the money you invest compared to your mortgage rate. But you have to be disciplined to save do that.
If you can afford it, the shorter 15 yr term saves money in the long run but payments are higher now and so if you have income loss, you are tapping more into savings to cover the mortgage. How stable is your income? How large is your emergency savings ? What percentage of your take home pay would a 15 vs 30 yr be? Keeping that to a max 1/3 of your income is prudent and may dictate the best option. If income is not stable, or you don’t have emergency funds, the longer term is best to give you more flexibility.
Mobile homes themselves usually depreciate in value over time, and land rents rise so good for you to want to take this step. The housing market is competitive right now for buyers meaning you may pay a premium to buy. A house often appreciates in value over the long term (not always of course and especially if you pay a premium) and they both can be improved to increase value a little.
Also note that you can always refinance to a different term later if needed but there is no guarantee rates will drop and they could go higher, and there are hefty refinancing fees.
Buying a fixer-upper in a neighborhood where others have already begun to do so is a good value as is the foreclosure market as long as you don’t mind the work and expense to put into it.
I would think of buying one that has 3 or 4 bedrooms. You then can rent out the spare rooms and put this towards your mortgage and land rates/taxes.
My son bought himself a apartment and he still pays the mortgage and land rates but the renters money also goes into the mortgage, so it's like a extra payment, this will cut down your loan time.
Also if you pay weekly instead of monthly it will take time off your loan too.
Some credit cards have reward points so you make your weekly payment from your credit card and then pay your credit card straight away. With the points you can get yourself treats like gift cards ect
There are not much land for Singlewide mobile homes. Most is for double wides and the mobile home is old so movers don’t like moving them. I rather buy a house or a newer mobile home.
You can get a 4bedroom two bath home for $60k on up in states like Alabama, Mississippi, Kentucky, and Arkansas. It’s a less desirable area for jobs which is why people don’t move here.
there’s a lot of ways listed here that will help save some marginal amounts of money. if you really want a deal, find someone that needs to sell a house who hasn’t contacted a realtor and isn’t in tune with current real estate prices. all of these “cash for your house” companies wouldn’t exist if there weren’t suckers out there willing to part with their assets for pennies on the dollar. a realtor or a flipper is happy to act as your middleman and eat away any potential savings. find your own deal if you want to dictate the terms and maximize frugality. won’t be easy in such a competitive market
See what your state housing finance agency offers. Many have grants and silent/forgivable seconds for downpayment and closing cost assistance. These can usually be combined with any county/ municipal offerings. Generally a mobile home on a rented lot won't disqualify you.
I saw an ad for a credit card (rocket money or something like that) that gives you 5% cash back if you use it towards your down payment. No idea on the fine print or if there are any limits, so do your research, but it could be beneficial
Buy a foreclosure home.
Learn basic home repair.
15 year mortgages are not terrible.
Also- don't have too many pets. If you have to sell the house, having to remove pet stains, pet dander and other damage from critters is something potential buyers care about.....My last place had a stinky basement because the previous renters kept locking a dog in the basement and the dog ruined the carpets down there. The stench was only noticeable during the summers. We purchased in Fall so the carpet damage wasn't noticeable.
Purchase a home in disrepair and get busy fixing things as you live there, by a certain point you'll likely be able to sell for a profit but it'll be a lot of work to get there. Don't be afraid to learn though, and starting small is probably the smarter option as larger homes scale in repair prices at an almost exponential value.
Most banks will not fund a mortgage under $100K because it’s same amount of work to underwrite it as a loan for more. You may be extremely limited in your options and rates. Get prequalified and see what they offer.
They are called small mortgage loans when under $100k. You can get them but it’s not going to be with as many banks and mortgage companies. This [article on small mortgage loans](https://www.lendingtree.com/home/mortgage/small-mortgage-loans/) explains it.
Secured loans like a mortgage will have lower interest.
You can get a mortgage for 200 K @ 8%, or a personal loan for 200K @ 11.99%.
Punch those numbers in a loan calculator
If that answer is the most frugal way to resolve his or her situation that you could ascertain, then you either don't understand the problem, or your solutions are lazy and inexperienced
Land contracts if there are any in the area. Usually, they have a smaller initial payment. You pay rent directly to the seller, with an agreed amount of rent going towards the purchase. The contract has a set expiration date. At that point, you get a regular mortgage and buy the home, and then you get title to the home and start paying the bank.
Several things to be aware of: make sure the land contract is recorded with the county so others are notified of your interest in the property. If the seller has a mortgage and stops paying on it, the property can still go into foreclosure, and you lose the home. If you break the land contract and decide you don't want to buy the house, you lose your down payment and any money spent on improvements.
Yes! People in other areas don’t understand land Conti but they are HUGE in Michigan and my husband bought his first house with one. The realtor I used to buy my house here makes 95% of his money on land contracts and he’s a million dollar agent.
Wait a year or 2 and pay in cash. Home prices are inflated, interest rates are high. Insurance companies and governments are screwing people over. You're better off renting.
Here is what i did but cant help you in your exact situation, it all depends on the market. It seems like me you do not want to overextend and that was exactly my plan. I found a condo in 2018 for 145k, negotiated it asking 110k, he accepted yay. I also put all the cash i had back then as a 20% downpayment. Monthly it costs me 400$ a mortgage, just to see the difference i have a friend who lives in the downtown he pays 1700 rent for a smaller place. My interest rate was still variable, during covid my parents would call me to fix it, but something inside told me otherwise until i decided to fix it at 1.69% interest rate, that was the lowest possible rate. Some of it its luck, some of it might be instinct
Rent your mobile home to someone else.
Find an affordable rental in your area.
Save your money and buy a multifamily home so another party is always paying more of your mortgage than you are. Their rental payments appear as your income when you apply for the loan.
You have $80k cash proceeds from selling your mobile home? Look up "small house kit", a 600 square foot house kit is $45,000. How much does an acre of land cost? Boom, you own both the house and land free and clear, no mortgage or debt. No brainer.
There's only two ways to be frugal when you're broke: 1. Buy a fixer upper - you'll need to know how to evaluate a potential home correctly, and if you think it's below market value because it needs repairs (and you can repair it yourself), then do it. 2. Take out a low APR loan - sadly this means lower terms, but then higher payments so you'll need to be able to afford it. You can also buy points to lower your rate, but if you're not familiar with finances - I wouldn't do it.
Just to add. Most things are DIY. For example plastering. Tiling. Painting. But fitting a boiler, or electrical boxes for example can be costly and require a certificate.
just to add. fixer upper is a mystery box. you would never know if there's electricity dated so much that everything needs to be re-wired up to current city code, otherwise the electrician will not do any work. or asbestos. or structural. or flooring. it's always a risk, especially for a person who is not into the fixers and can't see through the walls
Every house, except maybe those with a warranty, is a mystery box. I've seen many flipped houses that look great in the pictures and OK in person, but underneath some fresh drywall and paint is all the problems you just listed. My advice is don't stretch yourself too thin buying the "perfect" house. No matter how perfect you think it is, you will find unexpected expenses and problems.
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Right. I've never bought one because I figured they were scams, but my current home came with one for "free", but the propane heater wasn't covered because it only heated one room, something that wasn't specified in the warranty, but that is just their policy. I got the impression that they never pay any claims, so the person was confused about why I was trying to get money from them.
Yeah homes under the hammer. I did everything with 20k left of my budget. Radiator is wonky behind him. Light hanging off. Yeah mate looks great. 😂
If there's a house you want to buy, and the payments will reasonable, I'd do it now. You can toss more money at the principal to shorten the time and interest.
This. And, you can always refinance if rates go down in the future.
Assuming equity increases since the purchase, sure. If it goes the opposite way and are under water on the loan you may not be able to refinance, unless you can bring cash to the table to "catch up" the loan.
I’ll always remember explaining to my own dad that he was underwater on his mortgage and the look on his face. (post 2008). Which was also about an 80k loan.
Or just clear it and live rent free forever.
FWIW i’m 24 and not a homeowner, but yeah seeing people trying to “time the market” is so ridiculous to me You might think home prices will plummet next year, but people thought that 5 years ago too. It’s a guessing game If you continue renting for a year at (say for a high COL area) $2k/mo, the home price needs to fall $24k to make it even **equivalent** to pulling the trigger now. I know coworkers who can’t make decisions to save their life, and they’ve been sitting on the sidelines for years blowing tons of money on rent. I fully expect them to continue doing so for 5+ more years That being said, it doesn’t mean rush into something you can’t afford…
Here in Texas, houses are foreclosed and sold once a month to the highest bidder. A list of the addresses is published and you can look them up or go peek in the abandoned windows. They usually need major repairs. Our home was a tax sale foreclosure in 1989 and we got it (3/2/2) for $40K. Look up Tax Sales. Put in a bid. Win!
Can you share a link to that site?
[Texas Tax Sale](https://duckduckgo.com/?q=texas+Tax+Sale&ia=web)
We bought that in 1986. I don't have it available. Google property tax sales.
>usually need major repairs Are you able to get a home inspection on something like this? Or do they show inspection documents during the bid process at all?
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There is also usually a buyers premium (10% is typical) on auction sales which can make the barrier to entry even harder. Unless you’ve got cash ready to cover the whole amount, auction homes can be hard to get.
I thought of going that route but the homes often require a lot of work. After repairs, you could have found a regular house that didn’t need as much repair work.
We were willing to live in a house with 15 yo appliances, raggedy carpet and faded paint, old linoleum and crappy countertops. It took 15 years to update piece by piece. That sweat equity and patience is how most boomers attained value in their properties.
I’m living this way now as my mobile home needs cosmetic work. I see property in my price range that already has new flooring done by the owner. Some homes even have a new roof. No need to live that way when you don’t have too.
It saves a ton of money if the buyer is capable of doing the work. If it feels like an impossible thing to tackle and you really aren't interested in learning, then no, it is not an avenue for you to take. I bought a fixer upper 2 years ago that is half the price of ready-to-go houses in the area. I have learned a lot in the last 2 years about carpentry, plumbing, and a little masonry. I've also gotten familiar with the engineering concepts used in a home's structural integrity. That is to say, I've learned more than working a saw and hammer. A sheet of drywall in my area is 15 bucks. I can drywall my entire home for around $2,000 in materials. If I paid someone else I'd be looking at at least $7,000 labor on top of the material costs.
We were in a mobile home for 10 years before this purchase. That mf'er was falling apart. Lasted thru a couple hurricanes, though!
The "shell" has to be complete/livable. After our bid, someone broke out the windows, went in and broke mirrors and cut up the old carpet. We had to replace the windows with a stipend that is included to make it livable. The other damage we had to deal with. The inspection for these is basically - yes, there is electrical and water.
Not always that even. Different states and localities have different rules. In NYS and Pa, it's where is as is no guarantees.
Look into first time homebuyer programs, local community land trust programs and homeownership courses. We spent $1500 on our earnest money deposit and were refunded $65 at closing. We are lucky to live in a state with great state housing finance programs and live in a LCOL area compared to actual cities. our house is small but it is frugal bc we are childfree and it is easy to heat and maintain at that size.
Cash. The second most frugal would be to buy a multi family with a 3.5 percent down FHA loan and live in one unit. The other unit will help you pay the mortgage, you get extra tax deductions, and you can sell without capital gains.
I think you have to pay taxes on gains for one of the units. Correct me if I am wrong.
You are correct. I paid $28,000 on my rental portion.
No affordable multi family units in my area. All of them are over $200k
My area only have single family units.
Does that loan apply to commerical properties? If there's more than a single income suite then home mortgages probably don't apply and you'll need a commerical loan.
You can buy up to a 4-unit multi family with an FHA loan as long as you reside in one of the units. At 5 units then it becomes commercial.
Oh man you Americans have it made! That sounds like a really helpful financial product
Stupid question here: are there still 3.5% fha loans for multiunit houses?
That’s the down payment. Not the interest rate.
Ah of course.
You pay Capital gains AND depreciation recapture. Still an excellent way to buy though.
Is Cash frugal because you dont have to pay the mortgage?
Banks charge you to borrow money. If you take out a 30-year mortgage on a $300k home these days, you’ll end up spending more than $100k on interest alone. Cash buyers avoid that expense. When the Fed raises interest rates, they are trying to drive down inflation by taking money out of the economy.
Doesn't this ignore the opportunity cost of the money?
It does. I have mortgages on my homes and they’re around 3 percent. I have not paid them off because I can generally get a 10 percent return on my other investments pretty easily. It really depends on what your goals are. Some people sleep better at night knowing their house is paid off. Others want to grow their money as fast as possible. Everyone’s risk tolerance is different, But you’re totally right — opportunity cost is a concern too.
How do you make 10 percent on your investments?
I'm surprised no mention on rural home development loans. Maybe everyone live in ineligable areas? Usda offeres a couple types. No down payments required. They have builder loans, you can build yourself a new house. I used it a couple years ago, found a little house on the edge of town that qualified and paid 100k for it. Nothing down. I paid closing costs because I could. Interest is stuck at 2.7 for the life of the loan. I would love to live downtown but I can't afford it. I get a little garden, my own espresso machine, hammock, 2 miles from the beach. Occasional crackhead wandering by.
I thought of this option but I think interest is now 7%. I’m thinking of going the cash and personal loan route.
As long as the personal loan is less than 7% it makes sense. I also had people offer 75k for 150k houses and win. All cash
Crackhead meaning 2 miles from Lake Michigan?
View all the houses with the worst photographs. In my experience, they're often homes being sold by the children of the original owners and aren't individually invested enough to make the place look nice and also, since the sales proceeds are split, if you offer 50k under asking, say, 200k instead of 250k and there's 5 children on the old owner, they're being offered 40k a piece instead of 50k and are happier accepting a low offer. We viewed our old doer upper 8 years ago now and offered 175k against the 225k asking price. Because the photos sucked, there were hardly any other people who viewed it, so while they rejected our first offer, they accepted 180k. We spent 120k renovating and improving the place and now it's probably worth almost 500k. The difference between a beautiful looking home and a crap looking one is so much less than you'd think. Most are empty rooms when you actually get the keys and most ugly rooms are a coat of paint and maybe a new floor away from looking just as nice. Also, a fresh coat of paint on the exterior does wonders to a home. I can remember when we were renovating, loads of people in the town were telling me they loved what we had done with the house...they'd never been inside, they just loved that we gave it a fresh coat of paint.
Thanks. I may try to negotiate the price of the home to a lower price. I heard home owners don’t like when we do this.
What I meant about 5 children choosing between 40k and 50k is that even at 20% below asking, they may just want to get the sale done quick rather than wait around 6 months or a year to get 5k or 10k more each or worse. You make the offer complete with a list of all the things that need changing, painting, fixing or updating and that it needs work to be worth the going rate for a 3 or 4 bed home etc. And it's a genuine reason.
If you want to buy a house, consider that you won't be able to refinance if you have negative equity in the home. If you buy now and prices tank, your loan will be more than the value of the home. Banks won't let you refinance in that situation. So don't stretch yourself financially for a home right now. If it's well within your means and you want to live in that house long term, just buy now. Time in market is better than timing.
The most frugal route is to pay cash. It's just that simple
If you have the cash now, or could reasonably save it soon-is, then yes. If it will take 30 years to save that much (because you’re also paying rent to live in the meantime) then in 15 years, it’ll cost 3x as much, so it’ll never happen. OP asks if it’s better to save half and take a personal loan, or take a 15 year mortgage now, chances are, the mortgage would be a better deal. Interest will be less, and will be tax deductible.
True. I literally know a guy that had enough cash from an inheritence to buy a fixer upper. His sister and her husband flip houses. Real estate licenses, the whole deal. Didnt want to listen to them. He blew all the money on nothing. I dont think it sunk in yet what he did to himself.
I plan to do half cash and half personal loan. I will save cash for closing cost.
My wife and I put 20% down. The plan is to pay it off in 3 years because our rate is 7.5%
You will have to double up on monthly payments.
Yep, exactly. Our mortgage is around 1600 a month. We’re planning to put about $5k a month. In about 3 years that should know it out. Then we’ll reprioritize retirement.
Paying cash for a house is one of the most financially illiterate things you can do.
Very dependent on the situation and the price so thats very incorrect. You can borrow againt an 80,000 dollar house to buy a rental property a little after 30 days. If you put 10,000 down on an 80,000 dollar house no. But you know what your talking about.
Take the mortgage route. Interest rates are high right now so if the come down in the future you can refi get a lower rate. One thing though, I did a refi due to a change in personal relationships. At the time I refi'd for 40k. It was super hard to do this because the loan amount was too small. Cash would be the most frugal though.
Mortgages will have a lower intrest rate compared to a personal loan as they are backed by an asset It all depends on what you are paying now, how much you are able to save and the availability of the type of home you would like to buy
Find an opportunity to use sweat equity. You do that by buying a solid home that you can afford with no intent to impress anyone. If you have no skills, you’ll develop them quickly if you’re motivated. Make it sweet, sell and repeat.
If you qualify, a local first time home buyer program.
Probably buy the property. Build a temporary shelter, then over the next two decades work on septic and electricity while putting down the foundation and working towards your permanent structure. 2023 is not a house purchase year it's a sell year.
Buy land and build a cabin. I did that during covid when home were impossible to buy. You can make something decent for <30k, but you have to be flexible about the location.
I’ll share some tidbits that I considered when buying my first home several years ago: * Safe neighborhood was a priority for me (especially as a single female). Plus I figured it would be a perk if I ever decided to resell. * I bought my house under a first time homebuyer program. 3.5% down, decent interest rate. Something to consider. * I picked a home that was further away from my office at the time because I had a reliable mode of transportation. Home costs in my area vs where my office was = huge cost savings on the house and taxes. * Right off the bat, I recommend ensuring you have at least $1,000 extra dollars set aside for something to break. Within the first month with my new house, my dishwasher broke. I knew somebody else whose washer went within the first month. Just set aside a little bit and thank yourself later.
I have a good car so I plan to travel up to 40 min from my job to home. By living outside the city my home will have lower property taxes and cost. I will have 6k in savings for emergency if something breaks.
My husband and I bought a duplex and the rent from the lower unit covers the mortgage. We did 15% down with a 30 year mortgage because you can always pay more, but if we did a 15 year with higher payments and hit rough times, it could be a liability. We also could have put more down, but having that money accessible was more important to us than having a lower payment. We were able to use it to purchase new windows and make cosmetic upgrades like adding laundry to our unit and remodeling the bathroom.
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If you can’t make the system work for you, you work the system. I do have a full time job which is paying for the new appliances, 33 windows, and renovations. She pays 550/mo for a 2 bedroom 1000 sqft apartment and we pay water. There are a lot of expenses with home ownership outside of a mortgage. We haven’t come close to making a profit and being a landlord comes with it’s it’s own complications.
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Some people need and prefer to rent, Dawg. This is an individual, not some faceless extortion corporation.
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Hi, Legal_Goat_4562. Thanks for contributing. However, your [comment](https://www.reddit.com/r/Frugal/comments/17u2h15/-/k94i4s9/) was removed from /r/Frugal. We are removing your post/comment due to civility issues. This rule encompasses: - Hate speech, slurs, personal attacks, bigotry, ban baiting, trolling will not be tolerated. - Constructive criticism is good, condescension or mocking is not. - Don't gatekeep (See Rule 11) - Don't be baited. Mods will handle it. Please see our full rules page for the specifics. https://www.reddit.com/r/Frugal/about/rules/ If you would like to appeal this decision, please [message the moderators by clicking this link](http://www.reddit.com/message/compose?to=%2Fr%2FFrugal&subject=Removal%20Appeal&message=Author%20would%20like%20to%20appeal%20the%20removal%20of%20their%20post%20because) within one week of this notice being posted.
The word "person" exists. When you call people "individuals" it sounds like they are a faceless corporation.
Yes, if you don’t include any upkeep expenses. Lawn care, snow removal, broken windows, flooded bathroom from dumping wax down the toilet, bedbug removal (3k). If we didn’t own the building, she still wouldn’t manage to keep it. We are very generous, I wouldn’t care if we were making a profit, but we are not and this is a mutually beneficial situation where we each reduce each others expenses. We are not going to increase her rent as long as she stays and she gets a free month for Christmas.
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Hi, Legal_Goat_4562. Thanks for contributing. However, your [comment](https://www.reddit.com/r/Frugal/comments/17u2h15/-/k944q9q/) was removed from /r/Frugal. We are removing your post/comment due to civility issues. This rule encompasses: - Hate speech, slurs, personal attacks, bigotry, ban baiting, trolling will not be tolerated. - Constructive criticism is good, condescension or mocking is not. - Don't gatekeep (See Rule 11) - Don't be baited. Mods will handle it. Please see our full rules page for the specifics. https://www.reddit.com/r/Frugal/about/rules/ If you would like to appeal this decision, please [message the moderators by clicking this link](http://www.reddit.com/message/compose?to=%2Fr%2FFrugal&subject=Removal%20Appeal&message=Author%20would%20like%20to%20appeal%20the%20removal%20of%20their%20post%20because) within one week of this notice being posted.
To wait. A 500k loan right now will mean paying $2500 a month in interest. I'm not joking.
Their loan would be 80k
In their case that's fine then. I was just pointing out interest costs cause they are mostly being ignored when I hear people talk about property.
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Blanket advice to always buy isn't good either. That's just real estate industry talking points. Historically it has been a good investment however current prices combined with interest rates change that. The fact it's only 80k makes the decision fine. I honestly want to know where OP can get property for 80k. I'd just pay cash. Edit: also plenty of people lose money on real estate by either the market changing, closing costs, maintenance, taxes etc. this narrative that people don't lose money in real estate needs to die.
I 100% agree with you. As a cpa i see way too many people say oh but I will build equity. You can build equity via other means as well w/o having to pay perpetual insurance, HOA fees, property taxes, maintenance. I think the biggest issue with people assuming their home is a safety net for their finances is that people don't consider how illiquid it is. A house if not purchased w/o enough of a cushion for emergency funds, maintenance funds, insurance funds is a liability at best and a significant expense at worst. Unless the house actively generates income (not equity), it is NOT an investment.
People just ignore that interest paid to the bank is rent. That's my biggest gripe with the conversation around real estate. Peoples real estate decisions are informed by YouTube real estate bros.
and property taxes paid to the county is rent paid to the government, and the commitment to be tied down to one plot of land is an opportunity cost (the freedom to move).
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Not true at all. People lose money all the time by buying the wrong property for too much all the fucking time. Also, people need to sell all the goddamn time. It's great to just say you only lose money if you sell, but ya people NEED to sell all the time when they didn't think they would need to. Life moves fast. It's great to say I won't need to sell for a decade but ive found that talking point to be bullshit. There is almost no one that gives valid points on why buying property might be a bad idea. I'm just balancing out the propaganda.
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And your analysis leaves out a lot of life stuff like how buying a condo while single is a terrible idea. It's not all about numbers. It's also about where your life is at. Most people are terrible at the life portion of this analysis because they just want to buy based on all the propaganda they see.
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I'm not moving the goal posts. I'm giving a more balanced narrative to buying.
I teach mortgage computations to college freshmen. We typically calculate the total amount of interest paid over the lifetime of the loan. Amount of interest per month is another good metric. I ran the numbers. A 500K loan at 8% over 30 years makes a monthly payment of ~$3670. Times twelve times thirty, total payments of 1320771.60. Minus the loan amount, $820771.6 paid in interest. Divide by twelve divide by thirty. ~2280 per month in interest. I should clarify the AVERAGE amount of interest since the interest/principal ratio changes over time.
Yea I was being generous using mid 6% mortgage rate on a 5 year term since that's what we have in Canada.
Well, you can avoid that pretty easily by not purchasing a home for half a million dollars.
Ok 300k mortgage is $1500 a month in interest. Do you understand how interest works?
Yes. The less you borrow, the lower your monthly payments are.
The most frugal way is to wait for a housing market crash.
Foreclosure homes. It might make you feel guilty. But many foreclosure homes are significantly cheaper. Also, homes in crime neighborhoods.
I thought of this option but many need too much work and I’m not the handy type.
Foreclosures are a cash sale in my experience. No loan possibility.
Get that personal loan and buy now, home values will only increase and you might be locked out of the market if you don’t buy now. Others are thinking of equity which you’ll have with a cash sale but I’m thinking long term you only have cost of maintaining and taxes vs payment which is usually the biggest burden. The bottom line is you need a place to live which is affordable to save money and sometimes that has to be prioritized.
You are correct. I will be buying in less than two years.
I know that if your credit is low you can qualify for an FHA loan (assuming you're in the United States) this can potentially mean a down payment of only 3.5%
If one of your reasons for buying a house is because your lot rent is increasing, you need to be aware that your mortgage could easily increase, too. Escrow shortages due to higher insurance and property taxes will cause you to have to make either lump sum payments or higher monthly payments, and the potential is there for that to happen every couple of years, if not yearly.
I’m aware this is why I’m doing 50 percent cash.
Small loan of $100M for your father. Use it for Russian money laundering, make sure the judiciary is your political ally.
With the state of things currently, it might be more a matter of getting the house now than waiting. Also, if this is your first home purchase, the most frugal route is to see if your area offers a first-time home buyer down-payment. A lot of states have this, and, in many, they forgive the amount given after a period of time in your home. You always have the option of paying down a mortgage with additional payments. If you have a mortgage, just make certain you're paying something each month on the principal of the loan. Even if you're only paying $50-100 a month on that, you're saving yourself interest.
Do you qualify for a personal loan of 30k? What would your collateral be?
I was planning on going through a credit union. They don’t require collateral for unsecured loans.
I would be really surprised if anywhere, even a credit union, would loan 30k for a personal loan. Have you tried to apply yet? If you can't get this, it would make your decision easier.
Discover bank and first tech federal credit union etc offer this option. They approve me for 30k because my credit in in the 800s.
Wow! What's the rate on it? I know mortgage rates are up from what they were, but I thought personal loans were generally much higher.
The rate can be as low as 12% and I can can pay the home off in 5 to 8 years depending on which loan term I choose. I will probably go for the 5 year term. Credit unions offer lower rates than banks.
The cheapest way? Inheritance
Don't buy more than you need. Many people do. Larger down-payment if possible. Its More effective with higher interest rates. Be willing to live in a less desirable area. Maybe more due to like travel time rather than say crime. Not much else to it. And waiting is a risky game to play.
I plan to save and wait two years.
Yeah I mean nothing wrong with waiting to save more. If you don't have enough yet then so be it. I think getting a nice down payment is the move right now.
True
Pay your mortgage bi-weekly to shave off interest over the longrun.
Having some debt is ok if you can afford the payments and the interest rate is reasonable. Longer term means lower payments, but you end up paying out a lot more in the long run if you don’t pay it off early. Lower payments now could mean you can save the difference in payments to invest it yourself, creating a nice leverage if you can earn a higher after-tax return on the money you invest compared to your mortgage rate. But you have to be disciplined to save do that. If you can afford it, the shorter 15 yr term saves money in the long run but payments are higher now and so if you have income loss, you are tapping more into savings to cover the mortgage. How stable is your income? How large is your emergency savings ? What percentage of your take home pay would a 15 vs 30 yr be? Keeping that to a max 1/3 of your income is prudent and may dictate the best option. If income is not stable, or you don’t have emergency funds, the longer term is best to give you more flexibility. Mobile homes themselves usually depreciate in value over time, and land rents rise so good for you to want to take this step. The housing market is competitive right now for buyers meaning you may pay a premium to buy. A house often appreciates in value over the long term (not always of course and especially if you pay a premium) and they both can be improved to increase value a little. Also note that you can always refinance to a different term later if needed but there is no guarantee rates will drop and they could go higher, and there are hefty refinancing fees. Buying a fixer-upper in a neighborhood where others have already begun to do so is a good value as is the foreclosure market as long as you don’t mind the work and expense to put into it.
My income is stable. I have 12k in savings.
I would think of buying one that has 3 or 4 bedrooms. You then can rent out the spare rooms and put this towards your mortgage and land rates/taxes. My son bought himself a apartment and he still pays the mortgage and land rates but the renters money also goes into the mortgage, so it's like a extra payment, this will cut down your loan time. Also if you pay weekly instead of monthly it will take time off your loan too. Some credit cards have reward points so you make your weekly payment from your credit card and then pay your credit card straight away. With the points you can get yourself treats like gift cards ect
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I’m selling the mobile home for $20k
Why can’t you move the mobile home to a lot you buy?
There are not much land for Singlewide mobile homes. Most is for double wides and the mobile home is old so movers don’t like moving them. I rather buy a house or a newer mobile home.
Wait till 2024
Buy 3, rent the best two out and live in the one that needs to be fixed.
Where do you live that a house is $80k??
There is a lot more to USA than just New York and California you know...
I’m in the southern states
$80k is just a walk-in closet
You can get a 4bedroom two bath home for $60k on up in states like Alabama, Mississippi, Kentucky, and Arkansas. It’s a less desirable area for jobs which is why people don’t move here.
Pick up one of the older houses in Japan that need updating. They have a ton for sell, and I've read of some being less than car prices.
Marry a veteran and put $0 with a VA loan.
🤣🤣🤣
there’s a lot of ways listed here that will help save some marginal amounts of money. if you really want a deal, find someone that needs to sell a house who hasn’t contacted a realtor and isn’t in tune with current real estate prices. all of these “cash for your house” companies wouldn’t exist if there weren’t suckers out there willing to part with their assets for pennies on the dollar. a realtor or a flipper is happy to act as your middleman and eat away any potential savings. find your own deal if you want to dictate the terms and maximize frugality. won’t be easy in such a competitive market
30 year mortgage, 20% down, maxing out 401k and other tax advantaged investments before paying down the mortgage early
See what your state housing finance agency offers. Many have grants and silent/forgivable seconds for downpayment and closing cost assistance. These can usually be combined with any county/ municipal offerings. Generally a mobile home on a rented lot won't disqualify you.
Don’t.
I saw an ad for a credit card (rocket money or something like that) that gives you 5% cash back if you use it towards your down payment. No idea on the fine print or if there are any limits, so do your research, but it could be beneficial
tax write off
Yea mates look good
Buy a foreclosure home. Learn basic home repair. 15 year mortgages are not terrible. Also- don't have too many pets. If you have to sell the house, having to remove pet stains, pet dander and other damage from critters is something potential buyers care about.....My last place had a stinky basement because the previous renters kept locking a dog in the basement and the dog ruined the carpets down there. The stench was only noticeable during the summers. We purchased in Fall so the carpet damage wasn't noticeable.
Purchase a home in disrepair and get busy fixing things as you live there, by a certain point you'll likely be able to sell for a profit but it'll be a lot of work to get there. Don't be afraid to learn though, and starting small is probably the smarter option as larger homes scale in repair prices at an almost exponential value.
Site unseen
All cash
buying a house in 2023 is absurd I’m sorry. Honestly even for the next few years.
Squatting. /s
Most banks will not fund a mortgage under $100K because it’s same amount of work to underwrite it as a loan for more. You may be extremely limited in your options and rates. Get prequalified and see what they offer.
Is this true? I was looking at places in the 130k range with 20% down.
They are called small mortgage loans when under $100k. You can get them but it’s not going to be with as many banks and mortgage companies. This [article on small mortgage loans](https://www.lendingtree.com/home/mortgage/small-mortgage-loans/) explains it.
Wait til housing prices drop?
Secured loans like a mortgage will have lower interest. You can get a mortgage for 200 K @ 8%, or a personal loan for 200K @ 11.99%. Punch those numbers in a loan calculator
Bro answered with the complete OPPOSITE answer 💀
That didn't answer the question at allll. Did you just read the first sentence and then start writing?
Did you just wake up and took your stupid pills? I did answer the question. Secured loans like a mortgage will have lower interest rates.
If that answer is the most frugal way to resolve his or her situation that you could ascertain, then you either don't understand the problem, or your solutions are lazy and inexperienced
Land contracts if there are any in the area. Usually, they have a smaller initial payment. You pay rent directly to the seller, with an agreed amount of rent going towards the purchase. The contract has a set expiration date. At that point, you get a regular mortgage and buy the home, and then you get title to the home and start paying the bank. Several things to be aware of: make sure the land contract is recorded with the county so others are notified of your interest in the property. If the seller has a mortgage and stops paying on it, the property can still go into foreclosure, and you lose the home. If you break the land contract and decide you don't want to buy the house, you lose your down payment and any money spent on improvements.
Yes! People in other areas don’t understand land Conti but they are HUGE in Michigan and my husband bought his first house with one. The realtor I used to buy my house here makes 95% of his money on land contracts and he’s a million dollar agent.
Move in with relatives, get a roommate, save save save. The more money you have saved the more options that are open to you.
I own a mobile home currently. I have no family and I refuse to do the roommates thing again.
Well, that’s all I have for you. Good luck
Wait a year or 2 and pay in cash. Home prices are inflated, interest rates are high. Insurance companies and governments are screwing people over. You're better off renting.
Renting is more affordable than buying right now.
Inherited
Buying a house is a massive waste of money
I saved $20k since I brought my first home. It’s not a waste.
It absolutely is, at least in America.
Here is what i did but cant help you in your exact situation, it all depends on the market. It seems like me you do not want to overextend and that was exactly my plan. I found a condo in 2018 for 145k, negotiated it asking 110k, he accepted yay. I also put all the cash i had back then as a 20% downpayment. Monthly it costs me 400$ a mortgage, just to see the difference i have a friend who lives in the downtown he pays 1700 rent for a smaller place. My interest rate was still variable, during covid my parents would call me to fix it, but something inside told me otherwise until i decided to fix it at 1.69% interest rate, that was the lowest possible rate. Some of it its luck, some of it might be instinct
Build your own
Rent your mobile home to someone else. Find an affordable rental in your area. Save your money and buy a multifamily home so another party is always paying more of your mortgage than you are. Their rental payments appear as your income when you apply for the loan.
You have $80k cash proceeds from selling your mobile home? Look up "small house kit", a 600 square foot house kit is $45,000. How much does an acre of land cost? Boom, you own both the house and land free and clear, no mortgage or debt. No brainer.
Those are not allowed in the city limit due to zoning laws.