Profile picture for punkintoze

We don't quite have enough cash to buy a certain house. How can we make this work?

Hi! My husband and I have our eyes on a house that is listed at $169,000. It's been on the market for a very long time and has been vacant. It seems overpriced. From what I am seeing around, a listing price of about $140k would be more appropriate, selling at around $110k-$125k. It doesn't appear to me to be a foreclosure, but my realtor is looking into it. We have $85,000 cash, but I can't imagine the sellers would sell it for that little. Buying with cash should help however.

 My husband and I just moved to this area (Nashville outskirts) and are not working yet. He collects about $550/wk in unemployment. He is trying to get work in the same field, but may not be able to. I can get a job, but I'm not sure if it would help loan-wise. (We have 2 small children that I generally care for.) Our credit is very good and we have almost no debt. We own our vehicles and everything.

The reason we want this particular house is because it has 2 kitchens. I own a food business (5 years old) that is on hiatus right now until we get into a new home. (We are renting.) If and when we get into this house, I could start my business back up almost immediately and have an income. Ultimately, my husband plans to join me in the business. Once we get going, we could probably pay off the cash loan within a year or less. 

So, I need some creative ideas for getting the extra $25k to $40k cash to buy this house. Is there a way to get a cash loan using a cosigner, or some other way? I'm curious if anyone has any ideas. We can certainly find employment quickly if needed, but probably not in the same field as prior. 
 
Thanks for your help!
  • January 09 2010 - US
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Answers (17)

You may want to look for a Private Money Lender. They usually will loan up to 60% of value. If there's enough room, your 1st years payments could go into your loan amount. This might give you some "breathing room" until your business gets up and going. ..... Best wishes, Rudi

  • January 09 2010
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The human animal does not take "no" for an answer, easily.

The seller may be willing to relieve you of the burden of your savings,  in return for a lease-then-purchase contract. Then you could at least try to reestablish your business pursuits. I would try to make the lease part of the agreement as long as possible. It would need to be two years, at the least, and five years at the longest. The Seller may also consider a land contract, or owner financing, with an $85K down-stroke. Call their agent and broach the subject. This may be a property on which you could work out a mutually beneficial arrangement.

Feel free to call me at my profile phone number. I am bored to death, and it is too cold to leave the home office. There is more discussion that could be added.
  • January 09 2010
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Hamp bored? I can't imagine that! .... Happy funding, Rudi
  • January 09 2010
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Since your credit is so good why not put 35% down and get financed for the 65% and still have a cash cushion. Refinance once your income stabilizes into a conventional loan.
  • January 09 2010
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Profile picture for MagicalHouse

Talk about putting the cart before the horse.  Let you husband find a job first then buy a house.  Yes you need the kitchens for you business but that's getting way ahead of yourself.  If you business does not go as well in the beginning as you had planned your screwed, if you husband still can't find a job your screwed, if you kids get sick your screwed.  Keep you savings until a job is found. 

  • January 09 2010
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Make sure that the zoning of the home will allow for operating a home based business and if so whether you can operate a food manufacturing business from your home.

In some municipalities the manufacturing or making of food for resale (or even catering) is only allowed in NSA certified commercial kitchens. And in some municipalities there are restrictions as to what kind of home based businesses are allowed (if at all) depending on the zoning of the neighborhood.

You may want to consider looking into commercial kitchens with excess capacity that will rent by the hour.
  • January 09 2010
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Profile picture for Brian G. Allen

Get a job don't be particular unemployment will soon run out and you have responsibilities if you begin spending your cash which you may be doing to sustain housing waiting on the perfect job will be determiental.  If the property has little or no mortgage you may get the seller to financed it and with good credit and the rate would be good, do not look for other financing (hard money or any other high rate short term loan) if the seller finances you will own the property and can refinance in the future using your savings for this will be preferred.   

  • January 09 2010
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Profile picture for punkintoze
I guess I should have mentioned that my business has been going on for over 5 years and I have customers waiting. I am not concerned with not having enough income once I get the house/kitchen. The business has been successful, and once my husband works with me it will be MUCH more successful. Also, I already checked and our state/town does allow food manufacturing from home. In fact, it's more lenient here than the last state we lived in. Those not my concerns though. My question was about ideas on how to get the cash needed without a mortgage - because my husband may not be able to get employment in the same field, since construction is slow right now. It's my understanding that my husband would need to work in the same field for 2 years to qualify. That's why we're trying to get something workable without going the mortgage route.

Thanks for your advice! Most of it anyway.  ;-)
  • January 09 2010
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Profile picture for Brian G. Allen
It may be that you qualify for a loan providing your business has generated positive income you may qualify for a Conventional or FHA loan.  With two years of tax returns you can apply for a loan it will be difficult to determine how much without this inormation. Is your business a sole properitorship? Average your line 31 on your schedule C for 08 &  07 to determine your income. 
  • January 10 2010
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This screams bad Idea!
  • January 10 2010
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Profile picture for punkintoze
That doesn't help me. Why? Please explain.

The $85k does not count emergency money we have. We have almost no debt. We have a retirement fund. We get over $2000/mo in unemployment which doesn't run out for over a year. We CAN (and plan to) get jobs at first, just maybe not in the same field. I own an incorporated licensed food business which I have closed down temporarily due to the move. Last year and the year prior I only made $17k - $21k in sales because I knew we were moving and didn't market at all, but the year before that made over $45k in sales - and that's me working part time, alone while raising two small children. When my husband joins me, I estimate our sales will grow very quickly - even in this recession. We have chain stores interested in my products and several small stores across the US carrying my products. I just need the extra space and kitchen.

We are currently paying $1050/mo to rent a crappy house. I would much rather get into a house that we can use for our business, and that money would go towards a much better cause. We like the idea of owning our home outright, or almost outright. I'm just trying to take advantage of the cash-buying leverage we might be able to get.

I hope that explains things a little bit better. Just saying it's a bad idea doesn't help me at all. I came for advice and ideas, not to be put down. I think the fact that we have that money and no debt is pretty damn good considering how many people are in deep financial trouble right now. We're certainly not rich, but we're doing okay.
  • January 10 2010
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Profile picture for wetdawgs
Unfortunately the lenders have discovered over the past few years that lending on the promise of income rather than a history of income over at least the last two years has not been a good idea.  Therefore, you are caught in that trap.  

It is clear that you are thinking into the future and have a good plan, but the lenders are going by statistics.   Perhaps if you could develop a relationship with a local lender - bank, credit union or ?, they may be willing to consider your proposal.  
  • January 10 2010
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I hope you didn't "close down" your business in any official way. If so, you may have started your two year self employment clock over. Don't ever say that to anyone again, if you want to borrow money anytime soon. Maybe "my business has declined during this recession as have most others" or something similar, would suffice.

We beat this issue to death three weeks ago, or whenever. Have you guys spoken to a Lender of some sort in your area? You can't do any of the things you are trying to do, on Zillow. The real world is outside.

Punkintoze, if you would have been selling biscuits, or whatever, for the past six months, even a small amount of them, you may have qualified to borrow 50 or 60K alone. But if you have stopped doing business completely, because you moved, that is going to be hard to overcome, and then you are back to waiting for hubby to reestablish. If I were you, I would be looking for biscuit orders, rather than mortgage money, today.
  • January 10 2010
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Profile picture for punkintoze
No, I didn't close my business. Just moved it and I'm on a break until I can get a kitchen. My web site is still up and everything. I mainly sell online and to stores. I stopped taking orders mid-October of 2009 because we closed on our house in NH on Halloween. Then the holidays came and went and we're getting used to our new area in TN. Luckily, this is my slow time. Orders start picking up again in Feb/March. 

The stuff we were talking about a while back was about getting a mortgage with my husband going back to work in the same field. It may still happen. He was told by the union hall that some long-term gov't work is starting this week. He's heading to the hall tomorrow to get on the list. I was just curious about other options.

I wish I could sell biscuits! I can't even eat them however, because I'm gluten intolerant. LOL I am looking at some other properties now that may work and are less money.

Thanks for everyone's advice. I got some good ideas out of this.
  • January 10 2010
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Profile picture for Brian G. Allen
Punkintoze, you did make thing clearer thanks and I do wish you the best of luck.  I do think that it will not hurt to ask the seller to financed the property, it beats renting and you have cash that is manageable and you would own the property. Again, Good luck!  
  • January 10 2010
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Profile picture for punkintoze
Thank you so much! I appreciate it. :)
  • January 10 2010
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Profile picture for Memphis Owners12
It is risky.  Kudos to you guys BIG TIME for saving so much cash!!! That's great!!!!!

But I'd hate to see you risk your cash, even if you don't use all of it. 

If the business does not go well, or if life events change and you don't want the business, you certainly will not need two kitchens. 

This is a unique property, and it is VERY likely that the reason it has sat on the market so long is because it has two kitchens.  That means it will be very hard for YOU to sell it down the road as well.

All the best!
  • January 13 2010
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