- If you can't afford what you want, consider a fixer-upper. Do the repairs yourself to build equity and reap the full benefits of purchasing this type of home. The fixer-upper may not always be a bargain, so hire a professional home inspector before making an offer. Costly repairs may outweigh the benefits of buying homes that have deferred maintenance. Sharing ownership with family or friends as tenants in common could yield a nicer neighborhood than you could afford alone. MSN Money states that buying as tenants in common can be financially and legally complex and falls under the jurisdiction of the state you reside in. Co-housing or cooperative living is another form of shared ownership of housing and land, with shared financial responsibility for care and maintenance among the cooperative members. Decisions and restrictions for use are made jointly by owners of the cooperative.
- Look at foreclosure properties. Negotiating with homeowners who are in default on their loan can yield a 20 percent to 40 percent discount off the property's value, according to Kiplinger. Legal issues, such as title problems and bankruptcy frequently cause these deals to fall through. For a less risky investment, don't deal with property owners who currently in default. Pick up a foreclosure after the bank takes title to the property. This ensures there will be no delinquent liens, delinquent taxes or tenants occupying the property. These bank-owned properties (referred to as REO or real estate owned) sell for 30 percent to 40 percent below market value, according to Bankrate.com. HUD-owned properties, sold at auction at the county courthouse steps are another option. This can be fraught with risk for the buyer, since the property inspection period is short and funds must be produced the day of the auction.
- Lenders may negotiate with default homeowners and accept less than is owed on their loan, resulting in a short sale. The financial loss the lender takes is less than if the property went through foreclosure. For the buyer of a short sale, the property may be acquired cheaply, but the seller and lender will make no repairs. Because short sales are not as common as foreclosures, real estate agents may not be knowledgeable in the transaction. Find an attorney or real estate agent who has experience if you choose this approach to home buying, since the short sale process can be long and arduous.
- If financing is an obstacle in your home buying process, explore your options for a loan with little money down. If you are a war veteran, you may qualify for a VA loan, which requires no down payment. The Rural Development mortgage through the Department of Agriculture is available to home buyers in rural areas. These loans require no private mortgage insurance, which will lower your monthly payment.
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