My Bloomington California Home – A Temporary Dwelling
Looking back at my Montclair townhome I sold to an investor in a “no money down” deal it turned out that investor turned right around and resold the townhome to someone else in a couple of weeks. Amazingly, the person he sold it to was also an investor! I made another $700 at that time because in my assumable mortgage I charged $700 for someone to assume the loan, along with a credit check of any new buyer.
Even more amazingly that new buyer of my previous townhome resold the townhome to his sister a couple of months later. I collected another $700 and gave her a break by selling it to her because her credit record was spotty. Even though her credit wasn’t A1, I had a good feeling she was reliable after I met her in person, so I approved the purchase.
At the time I had a fairly good job as a programmer/analyst but having a family usually kept me short of funds. But by now real estate investing was in my blood. I had taken two years of real estate back in college when I attended Pasadena City College in Pasadena California.
So I put on my thinking cap and decided I would find a deal on another home no matter what. However, I had a good reason to find a deal on another house. And that I did – sort of. It wasn’t such a good deal, but I was pressed for time because my current home was in escrow and soon we had to rent an apartment if I couldn’t get another home to live in.
Look Thoroughly and You Will Find – A House
I did a lot of looking and searching in neighborhood throw-away papers and finally found a home with a relatively low downpayment where I could assume the loan. I don’t remember the exact price I paid for a nearly new house I purchased in Bloomington California, but it was in the high 70 thousand dollar range.
The house was a small 3-bedroom 1 bath home, but had a nice size back yard and was on a nice block in a so-so area. When I purchased the home it was sort of a flash buy, or in other words I needed a house quickly to live in. I bought that house instead of moving to an apartment while a new house I was purchasing was being built.
I didn’t want to waste money renting an apartment for six months or so, so the Bloomington California house was to be a temporary home for the family for a few months. I didn’t like the Bloomington area either, but at least the street and surrounding streets where we lived were nice.
None of that bothered me too much because we had already found a new home that was going to be built in a few months. It was in a new area of Lake Elsinore where they had cleared about a 55 acre area near the foothills of Cleveland National Forest. A small private builder was to build about 50 houses on that plot. Each house had about an acre, some more.
Aside from being in a small city, it was a few miles away from the Freeway, which meant little noise from traffic and it had the largest lot I could find (that was essentially level), 1.20 acres, was in a very quiet area and the houses to be built were not jammed together like most new houses in Southern California. And to make it really similar to a country home there were no street lights and only one street in and out.
All I had to do was be able to sell the Bloomington house by the time our new home was finished. Sounds easy, but if you are forced to sell a property by a certain date then things become way more difficult, especially if real estate is in a downturn, which it was at that time.
High Interest Rates and Payments
Although I got an OK deal on the Bloomington house cost, the payments were way too high and causing a big strain on my finances. That was because the interest rates at that time were very high, resulting in an extremely high house payment for such a cheap house.
Since the house was very new it had the prevailing very high interest rates. Under normal circumstances I never would have purchased a home with an assumable loan with such high interest rates, but this was different. It was a move that needed almost perfect timing with the intention of only keeping the house just a few months.
My previous home was now sold and we had moved to the Bloomington house. The purchase of that house was a simple pay the money for the down payment from the nice profits of selling my original hone and assume the FHA loan. I don’t remember the exact downpayment, but it was in the $7000 range. That was less than a normal 20% down usually required for a conventional loan.
Our new home was finished about three or four months after we moved to the Bloomington house. We had to wait until our daughter finished her semester in high school before we could move to our new home. As a result it sat empty about three months.
Unfortunately for me the payments and interest rates were way too high to find anyone that would assume the loan. So I wrote off that strategy. Instead I did what I really didn’t want to do – I listed the house with a real estate agent.
Selling off that House
Houses weren’t selling very well at that time and there were few people interested in buying my house. Time was running short and the high house payments were killing me.
I desperately wanted to get rid of the house, mainly because of the very unfavorable loan terms. I finally got an interested buyer, but they were short of money. Not only that, the real estate agent was Mexican and decided to go to Mexico for a month or so instead of pursuing the potential sale of my house.
To make a long story short when the agent finally came back some three weeks later I made an under the table deal with the real estate agent to get the buyer to buy the house immediately. It worked, but that deal cost me a bunch of money which I knew I would never get back. What kind of thanks did I get? None. None from the real estate agent, none from the buyer.
My daughter finished that semester of school and we finally moved to our new home in Lake Elsinore, about 45 minutes south of our Bloomington California house which had just been sold. I didn’t make much profit off that house, but considering I didn’t have to come up with any unusual strategy and we only stayed there about six months, I made about $40,000 profit.
Others would have probably moved into an apartment instead of looking for a temporary house, but my thinking was the more experience in finding houses to buy was worth a lot more than taking the easy way out by renting an apartment. Besides it was a challenge and in most cases I like challenges.
Buying a house was a lot better than paying about $1400 a month for a decent apartment (in Lake Elsinore) for six months, plus I had a nice write-off on my taxes because of the high interest and real estate taxes, something I wouldn’t get had I chosen the easy way out and rented an apartment for those few months.
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