How To Obtain Housing In A Tight Market

There are countless real estate gurus, some of them actually quite knowledgeable, who will gladly sell you books and tapes explaining how to buy real estate for no money down. According to them, there are houses just ripe for the plucking. Their big selling point is the ability to Git 'R' Done with no out of pocket cash and even, sometimes, with money back at closing.

Do these no money down methods actually work?

At least some of them do. In late 1995, using techniques from a No Money Down course I'd bought a few months earlier, I succeeded in purchasing a $325,000 home in Wenatchee, Washington. There was some money down, but only $1,500, and I did get cash back at closing. There was no credit check.

It was a textbook exercise, never mind the fact that ten months later saw me abandoning that place entirely, letting it go back to the seller because I didn't have enough money to keep up the payments. However, families able to target houses in that price range are not the focus of this Hub. More appropriately, let's provide a little guidance for the family breadwinner who is none too sure where the next loaf of bread is coming from.

With that in mind, there are a few terms worth remembering:

+ Creative Financing +

+ Lease Option +

+ Mobile Home +

+ Covenants +

+ Cheap Land +

+ Rent To Own +

Let's discuss covenants first: From a need-a-home consumer's point of view, any covenant is equivalent to evil, awful, horrible, dark cloud bad thing. Developers love all covenants, which are simply contractual limitations telling you what you are not allowed to do on that piece of cheap land you just bought.

Pro-covenant folks point out that if not for covenants, some fool would be rasing smelly old hogs and king cobras in that new neighborhood full of million dollar homes right next to the golf course. The flip side of that, however, can be seen in one particular covenant applying to our present place of residence...on the 35 beautiful acres where we intend to one day build our dream home...and on the 20 similar acres on which we lived in the Montana mountains for three years.

That specific prohibition? Very simple: NO MOBILE HOMES!!

Still, two of those three places did keep us from being homeless during desperate times. In Montana, $500 dollars down got us the land, and we built a low priced (and portable) cabin that fit within our contract's guidelines (See Hub: How To Build A Survival Cabin On A Shoestring Budget.).

In the newly built area where we live at the moment, a brand new house came with the deal. No mobile home involved, but we did need creative financing. The mortgage broker found us a reasonably priced loan, theoretically a "nothing down" deal, but our real estate agent assured us that with the size of the loan--nearly a quarter million dollars--the lender would never take us seriously unless we plunked down a minimum of $2,000 in earnest money.

At that moment, we didn't have two thousand dollars.

Yet it turned out to be no problem. Our realtor, a fine lady with a record of never having failed to close a deal once it was begun, put up the $2,000 herself. In my name, of course. She required nothing but a handwritten agreement between us, a short term note. She also structured our offer to the seller so that we paid more than the asking price "on paper", but then the seller paid certain costs that would normally have been ours to handle.

The result: At closing, the escrow agent handed me a check, cash back, which repaid our real estate agent. Or would have, except that I needed to use that money to pay taxes; the agent was actually repaid some three weeks after closing--by mututal agreement.

As to building on the 35 acre site, that will have to wait a while yet.

Few families would choose homelessness as a way of life, yet the vast majority of us--even in the United States--are no more than one or two paychecks away from just that fate. One way that dread destiny can sometimes be avoided is by use of the lease option. Simply put, a lease option gives a renter the right to buy a rental property, subject to specified terms.

Here's the real beauty of it: Those terms are not "set in stone" but can be anything accepted by both landlord/seller and renter/buyer. There is one heavy duty limitation: You are not likely to find anyone willing to let you move into their house on a lease option basis unless they are desperate. This is one of the few contracts that can have huge benefits for a renter/buyer, and the "other side" usually knows that.

So...how do you find properties available on a lease option basis? Simple: You figure out how to locate property owners who are more desperate than you are, or at least as desperate, and you go from there. Curiously, every time I've moved into a house under a lease option contract, it has been a mobile home, but...so what? It's a roof!

My finest hour in that regard took place in Chinook, Montana, in 1983. I had a new job in town as a Social Worker but did not have a place for us--my third wife, one teenaged son, and me--to live. Chinook is a small town, and right at that time, there was no rental to be found. There were a couple of places up for sale, but that was out of the question financially.

A few hours of scrambling did turn up one possibility. A small, older mobile home on a city lot had been up for sale for quite some time without a nibble. Eventually tracking down the owner, I introduced him to the concept of lease option contracts. A lifelong rancher in the area, he had literally never heard of such a thing, but he was willing to listen.

After all, getting some money for the place as a rental while still maybe getting a full sale out of the deal in the end...it did sound a good bit better than month after month of no income at all from the place. I wrote out a contract on the spot, by hand. We both signed, and my family had a place to live.

It should be pointed out that in the end, both parties did benefit. Before winter came, I had built a small, covered porch with a storm door. The addition kept out a lot of cold during the winter, provided a place to hang wraps and leave wet boots without messing up the home itself, and--since I'd smoothly integrated the roofline of the porch with the roofline of the mobile--added considerably to the curb appeal of the property.

We paid rent to live there from July of 1983 to February of 1984, then (long story) abandoned it back to the owner. Although we had never excerised the purchase option, our housing cost had been quite reasonable even with the improvements we had made to the place. The owner had made a little money and ended up with an asset that would more easily sell the next time. Overall, a win-win situation for sure.

Rent To Own is a familiar term when it comes to personal property ranging from electronics to furniture. It is not so well known when it applies to housing. In a sense, though, it is really just one small step beyond a lease option. A "regular house" in a neighborhood is probably not a really good candidate for this find me some housing quick! technique, simply because the payments are likely to be prohibitive in size.

We made it work with a mobil e home once, though. Pam (my wife) and i lived in Sturgis, South Dakota, for a few months in 1997. When we left, we weren't sure where we were going next--and living in a motel was going to be well beyond our budget in short order. Our first night away from Sturgis, we stayed in a small motel in New Underwood.

There was a restaurant and convenience store on that same property. Most importantly, there was a bulletin board on the wall as you headed in to shop or to eat. On that board was a small notice, a mobile home lot for rent. It turned out to be six miles out of town, a good quarter mile in from a dirt road, on a working ranch. The main house was a good mile away, but the rancher had a backup barn and a sizeable corral next to the rental spot.

It was peaceful out there, a few dozen yards away from turbulent Elk Creek, surrounded by nothing but hayfields, pastures, cottonwood trees, and cattle. It had been rented before, so electrical service was available, and a well that supplied the corral stock tank also meant we'd have running water. Home sweet home.

Except, of course, we didn't have a structure. Even so, we made the deal with the landlord, spending that first night in a leanto tent made of nothing but a large tarp, a few tent pegs, and one rope tied off to the handlebars of my motorcycle. Fortunately, I'd figured my directions correctly: When the wind changed and the rainstorm hit, we actually stayed dry.

Two days later, we owned a mobile home. Sort of, that is. A creative dealership in Rapid City sold used mobile homes on a Rent To Own basis. The one I selected from their limited inventory was only a 14 X 52 single wide, its toilet needed work, and although it did come with some appliances, the refrigerator did not work.

So? We were out of the rain, out of the sun, and later out of the snow. Yes, it took some scrambling to make it liveable, and before long even the old hot water heater had to be replaced...although we did not replace the bathtub when it broke. As many uses as duct tape has, we used clear packing tape for that repair.

Perhaps this Hub may one day provide a reader with food for thought. Maybe even help a desperate Soul come up with housing by using an angle that hadn't occurred to him (or her) previously. I do hope, however, that I will not decide to add more "quick housing techniques" at a later date. I'd really prefer not to have to scramble that hard, ever again.

Thanks for reading,

Ghost32