Owning home is not like renting. There are a million expenses that you aren't considering.

With that said, if you are willing to put in the work, you are talking about a pretty tiny investment. You'll probably put in a ton of time and effort and make something around minimum wage in profit. That would be a great learning experience for a future property. Of course, you will need considerable sacrifices over the next 2 years to pull it off - trading social life for construction time.

BTW - renting isn't throwing money away. With most mortgages, you pay a ton of fees and interest that completely negate the benefits over renting in the short term. The country is full of people who bankrupted themselves thinking owning a home was easy money.

I'm not being rude, but how can you pay off a $12,000 mortgage in 2 years, paying what you're paying now? $500 per month does equal 12,000, but you're not figuring in the interest (which is usually a lot more than your principal in the beginning), property taxes, insurance. And what about the cost of your materials?

Perhaps I missed something in your post, but I can't see the numbers working out the way you think they will. Why don't you go to the bank, sit down with the loan officer and have him/her show you the tables on the kind of mortgage you would need.

Be sure to ask for a mortgage that doesn't have a pre-payment penalty AND that you can pay any amount above the principal.

I think the sticking point in your plan is the idea of flipping the house. If you were going to live there, it would be okay to spend a little more. If you're buying and fixing up the house to sell, then you have to really do a budget job, AND you have to be absolutely certain you'll be able to sell for enough to make the cost and work worthwhile. However, I think it's always a good idea to put your money where it will work for you. Me? I've never paid a penny in rent, myself--can't see the wisdom in tossing my money into the trash. DH and I are having settlement next week, selling the house we bought when we were 23--and we're getting 8 times what we purchased it for (granted that was many years ago, but the house really is in far better shape now than then.)

Just do all your homework, run the numbers every way you can, and make sure you know what you're getting into ahead of time. It may be a really good investment for you, especially since you're prepared to do a lot of the work yourself. Good luck.

With the housing market down and not expected to improve any time soon, I would think twice about buying, fixing up, and plan on selling in two years.

If you were planning on living in the house for several years, it would be worth it. By then the house market may have improved.

You could buy the place, fix it up, live in it for a few years, then rent it out, keeping it as an income property. Then buy another fixer, etc.

You will more than likely have to pay cash for the home. I have not found any bank that will lend less than $50,000.

Lending amounts are completely dependent on location. It will take some hunting to find someone to do such a small mortgage though. My sister financed a 20k house a couple years ago. In some hard hit areas of the country, those are becoming more common.

re paying it off in 2 years - that is completely doable. Initial payments on standard mortgages are mostly interest on a 30 year loan. However, you are going to be paying 8 times what is "due" each month, so the overwhelming majority of your payment would go to pay down principle.

You are likely to have a problem getting a mortgage without full time employment for a few years.

You are also looking at so little money ($12,000) lenders are not going to be all that interested.

You are NOT "throwing money down the hole renting" -- you got a roof over your house for that money. Sure, you don't own the place. But you got to call someone else when the oven went out, the furnace didn't work, or you found termites. It wasn't your problem. When you own, it is. Renting also gives you the flexibility to drop everything and move. Generally, I would not recommend buying if you know you are moving in 2 years. But for $12,000? I can see the allure. Do look at all the costs though. We are in the midst of getting a mortgage with a payment ~$900/month. The property tax part of that mortgage is going to be $300/month. The part that goes toward the loan? Only $560-ish

I understand the desire to own. We are currently under contract to buy our own place. But we have rented for the last 6 years since selling the 500 sq ft condo I owned when I married my husband. Why? Because we weren't sure of our future. We didn't want to be burdened by a piece of property to sell that would keep us from being mobile when we needed to move to a new locale. Now, we are ready to stay in one place and have bought a home we hope to keep for the next 10-15 years.

I'm a longtime renter who totally understands your wanting to buy. I too have been looking but at least in my area, those lower priced properties are a cash-only situation. Around here they would rather bundle something at a very low price to an investment group than sell at a higher price to an individual who needs financing. Just today I saw a quote from a local RE analyst to the effect that 70% of sales in our area are for cash and almost all to investors, mostly from overseas.

Honestly, I don't think it's a good idea.

There is so much that could change in your life in the next few years, I think you'd be better off saving as much money as possible and when opportunity knocks (romantic interest, job in other location, maybe you'll want to travel) you'll be free to pursue it.

But if the OP is able to rent the house for less than their mortgage payment it shouldn't really matter if his circumstances change.

Better double to triple that $500 a month amount. It will take that at a minimum in order to pay the mortage with interest, insurance, and taxes, not to mention utilities, which are likely to be more expensive in an older home. And then there are the renovations costs on top of that. You just cannot go below a certain price point in home renovations. Even builder grade material costs X.

As far as making a "profit", well you'd have to value your labor as below minimum wage to think that you're making money doing this. It's a hobby to keep you busy and out of the bars, not a true money making proposition for the short term. If you buy a house with the intention of making it a home for at least 5 years, then your plan is more doable. 2 years and the fact that you really aren't all that in touch with real world homeowner costs says that this isn't a good idea.

On the other hand, if you currently really do make enough to save the entire amount and buy such a home in cash, then that's another story. You can always turn it into rental property---with the headaches that that will entail. At your age, even if you lose the home through a job loss or bankruptcy, you still have plenty of time to start over. And 15K is cheap for the education that it will provide you!

If you can get a mortgage from a bank, you will not be penalized for paying off the mortgage early. You could get a 10 year mortgage at a low interest rate if you are interested in building up equity quickly. You will need to add real estate taxes as part of your monthly payment. If you put down more than 20% you can avoid mortgage insurance.

If you plan to move in 2 years, you have to determine if you can make the repairs and sell it without losing money. It sounds like you would like to flip this house, but live in it at the same time. If you are able to do most of the labor yourself, then you have a good chance of at least breaking even or possibly making a profit.

One of the bigger changes in home ownership from renting is the minimum 'safety' net you have. If you wake up tomorrow and need a new roof, or a water heater, or structural repairs, can you afford it? If you lose your job how many months can you survive until you find another one? Can you handle multiple 'disasters' simultaneously (lose job, broken car) and still have a decent safety net to pay bills? For us our minimum safety net needed to triple what it was when renting. And as a single income household, the risk can't be spread out. Additionally, some utilities were included in our rent so while the mortgage amount was less than our renting amount, when we totaled other banking costs, interest, taxes, home owners, and extra utilities, we were paying quite a bit more. Recently a hurricane came and visited, and while we had insurance, many thousands needed to be paid out while waiting for insurance. If we were renting, it wouldn't have been our responsibilities - part of what you're paying for when renting is protection from costly surprises.

You also mentioned working full time and part time student (Kudos!) - how realistic is it to be able to fit time in for renovations on top of that?

2 years seems short to me in today's market, especially as an investment. The past two years haven't been friendly to my area.

There's a lot we don't know - your finances, your housing market, the post-flip price, cost of renovations, financing options, etc. Just continue to make calculated decisions and have a good plan figured out before signing anything.

I bought my first house about a year after college graduation, in a down market. Relocated 3 years later, took forever to sell, got out exactly what I had paid for it because it was still a down market. Swore I'd never buy again unless I was going to be somewhere for at least 5 years. The main reason is that houses are not liquid assets (can take time to sell) and they have high transaction costs (realtor fees, loan origination fees).

I broke my rule 2 moves later, because my employer would cover the transaction costs of any future relocations, so that negative went away.

It's also very true that maintenance costs add up. Not just stuff breaking, but you have to buy lawn care equipment and you'll want to change things to make it a nicer place to live.

If I re-wound my life tape and was in your shoes again, I'd save up enough for the house plus an extra 3-6 months of living expenses, and pay cash for the house. Paying cash will save you a few grand out of the gate, not to mention the interest you'd be paying. And on a $16K house, $3K is a high percentage. Then cash flow the improvements you want to make.

Also, look at the neighborhood and get an estimate of what the house could sell for if fixed up. Where I live, the $20K homes are undesirable neighborhoods where all the fixing up in the world won't budge the price more than a few thousand. That's because they're mostly low-end rentals, so your potential buyers would be mostly investors, who look solely at what they can rent it for, not how nice and homey the finishes look. Those neighborhoods have a limited number of people willing to live in them (i.e., those that can't afford anything else), and thus there's a ceiling on the rent they can charge. Now if you're talking about a $20K fixer in a neighborhood of $80K owner-occupied homes, that's a completely different story.

As an owner of two homes, I can't begin to tell you what I wouldn't give to be a renter and owner of none. Owning a home (especially one with a mortgage) is nothing but an albatross hanging around my neck that severely restricts my ability to move, therefore negatively affecting everything from my career options and prospects, to my ability to care for my aging parents.

The ONLY perk of owning is being able to do whatever you want to the property, but hell..some landlords will let you do what you want, too.

Use Excel and create this spreadsheet:
Mortgage amount (should be low):
Taxes:
Water & Sewer:
Insurance:
Landscape/Equipment (snow removal, grass/leaves/weeds)
Maintenance (new roof, new paint, new plumbing, new appliances)?

The US economy was flipped over because the dream everyone should own a home but paying a mortgage is NOT the full cost.
Additionally, as a fixer-upper I guarantee you the estimate vs. reality of fixing up a home can/will be quite expensive.
The caution with this is the ONLY fixed cost is your mortgage amount as every other figure can/will probably raise over time.
Unless the home offers you the opportunity for a housemate to cover the cost or comps in the area are very high after it is fixed up. I'd wait two years until you are more mature in life with goals/objectives.
You sound quite mature for your age but in two years owning a very small house may not be important if your sights are on bigger better things.

My daughter bought a house on her own only one year out out od college and she got a great interest rate, but she had a job paying 50 thousand a year and great credit.

If you are planning on moving in 2 years- don't do it! Rent and save as much as you can.

My son is 25 and is a homeowner. In his area, rentals are expensive and scarce. It was cheaper for him to buy the house, even with prop taxes and the like included.

Do what is best for YOU and your area of the country.

In summary, you want to get into house flipping business. You need to run a few numbers before you jump in.

Have a spreadsheet to show COST, you may want to use the spreadsheet rooseveltl provided as a base and add a few more attributes, such as cost of tools and material of potential "fixes", cost for your time working on any of the projects, money and cost of money for you to cover potential risks, cost of transactions (fee for realtors, lawyers, marketing, appraisers, loans..etc.) of buying and selling the property. You also need to do what if scenarios and have contingency plans in place for each of the scenarios.

Use another spreadsheet to show BENEFIT/RETURN, as how much you could get after you sell the property when all is done. Use Sold comps as guidelines.

Don't overlook your mental and physical limit; working on a project for 3 days is not the same if it lasts for 18 months. You will be working three jobs: your regular job, your schooling, and the house. You will be constantly joggling all the tasks, making decisions and enduring all the "wrong" things from these three areas. You will live in a construction zone for a long duration. Since your time horizon is only two years, it is likely you will be going through learning curve all the time. If you don't have sufficient funding, it is likely you will worry about money constantly.

To fine tune the Cost and Benefit analysis, you may receive more valuable inputs from experts on this board than a layman like me.

"Is it a wild eyed thought then for me to consider buying up such a property, living in it while also working it back into good condition, and then selling it after paying it off? "

You say the house is in a good neighborhood. How is the rental market?

If you continue to pay $500.00 a month rent and stay where you are for 5 years, that would be $30k.

How long do you think it would take to pay off $16.5?

If you didn't have carpentry experience and a full time job with a steady employer than I might think twice.

However I think the price is right. I think with with the skills you have, it might be doable.

Good luck whatever you decide!