In the USA you can buy a house for $1: how profitable is it really?
Government programs will let you buy a home for $1, but other costs may be much higher than you think, reports Lifehacker.
Buying a home is the dream of most people. But with home prices still rising and higher interest rates making mortgages unaffordable, it may seem impossible. Even if you look at the cheapest areas to buy.
So it's no surprise that people sometimes come across an incredibly cheap home and get excited about it, even if it needs some major renovations. You can find homes for as little as $13, and cities across the country have programs that allow you to buy a home for next to nothing.
On the subject: Five life hacks for profitable purchases
If you're wary of participating in a government program, there are plenty of run-down, old $10 homes out there.
The scheme is obvious: you collect the minimum down payment, buy the cheapest house in the world and make it livable using your equity. There's just one problem: it's usually a terrible idea.
Cheap houses are often sold with certain conditions
If you're looking at a $1 house and imagining yourself just moving in and doing patchwork renovations to make it safe, think again. Almost all of these programs have many additional conditions, including:
Repair required. Government programs always require you by law to repair the property. That's essentially the whole point, from the government's point of view, to turn rotting old houses that generate zero tax income into viable properties. You need to review the requirements carefully to make sure you know exactly what is required of you.
Financing. Even if you buy a house for $1, you usually need to prove that you can afford to make the necessary repairs by demonstrating your financial capabilities.
Residence. Many of the programs only work for people who have lived in the area for a while. They are intended to increase home ownership among local residents. And many of these programs require you to commit to staying in your home for a certain period of time (Newark's program, for example, requires you to live there for at least 10 years).
Non-guaranteed price. Most programs don't actually guarantee you a $1 house. Property prices are flexible and some people can only qualify for a price of $1.
The bottom line is that buying one of these homes makes you legally responsible for repairing it. Repairs can cost a lot of money and have many negative consequences on your life if you fail to do them. Even if you look through all of this and think it's worth it (and that you can meet all the requirements) or you find a super cheap home that doesn't participate in any of these programs, still think twice.
Super cheap houses are hard to finance
It's one thing if you buy a super cheap house with cash. However, if you plan to finance it to any extent, you will run into problems. Simply put, most lenders are reluctant to issue mortgages under $150, and finding one that will consider a loan for much less is nearly impossible. If you're planning to finance the purchase of a home under $000, this will be a real challenge.
Fixed costs must be taken into account
Another aspect of buying a super cheap home is the maintenance costs:
Property tax. The amount of property taxes you'll pay depends on where you live. The national average is just over 1% (average payment approaches $3000 per year). But if you live in New Jersey, you'll pay a whopping 2,46%, which equates to a median payout of $8928. The main thing to keep in mind is that you will be taxed on the assessed value of the home, not the purchase price. Just because you bought it for $10 doesn't mean your property taxes will be based on that value—they'll probably be much higher.
Like the article? Support ForumDaily!💲
Insurance. The average annual cost of insurance is about $1428. If you live in a flood zone or area prone to other natural disasters, your insurance costs may be much higher.
Cost of materials. Even if you think you'll do a DIY renovation to turn your cheap old shambles into a dream home, you'll have to buy all the materials. Remember that this is an old house that has not been renovated for a very long time.
Unforeseen repairs. You know that buying a home for less money than a used car comes with its challenges. Many of them will probably be clear from the announcement. But if a home hasn't been maintained (or occupied) for some time, all sorts of hidden damage can occur, from cracks in the foundation to the presence of toxic materials, that will cost a lot of extra money to fix. You won't know about them until you own the house and start working on it. Another problem is that homes that are allowed to fall into disrepair often cost much more to heat and have higher utility costs overall.
Finally, there are other potential downsides to buying an incredibly cheap older home that you should consider:
You may be interested in: top New York news, stories of our immigrants, and helpful tips about life in the Big Apple - read all this on ForumDaily New York.
The quality of life. If your goal is to save money by moving right away and cleaning up your home, consider that you'll be living in a home that likely lacks many amenities and isn't in the best condition. Your super cheap home probably isn't in the best neighborhood.
Living in a crime-ridden area or in a neighborhood filled with abandoned houses will not be a pleasant experience.
Resale. Even if you successfully renovate your home, if at some point you decide to sell it and move, you may not get back your investment unless the rest of the neighborhood improves too. After all, you only bought the house because it was dirt cheap—finding a buyer for a much higher price can be challenging, no matter how well you've done the renovations.
As home prices continue to rise, so does the temptation to take a chance on a very inexpensive home to renovate. Before you do this, be aware of the many potential problems.
Read also on ForumDaily:Subscribe to ForumDaily on Google News
Do you want more important and interesting news about life in the USA and immigration to America? - support us donate! Also subscribe to our page Facebook. Choose the "Display Priority" option and read us first. Also, don't forget to subscribe to our РєР ° РЅР ° Р »РІ Telegram and Instagram- there are many interesting things. And join thousands of readers ForumDaily New York – there you will find a lot of interesting and positive information about life in the metropolis.