How I did it:

I started looking at condos through one of the numerous online searching sites.  However, a local blog also posted information on a condo auction.  I toured some regular condos for sale with a Realtor, but toured the condo for auction on my own.  I made a ranking system in excel to rate which properties I liked best.

I made another excel sheet to see what the financial situation would look like depending on the price.  This tool was very helpful in determining my price limit for the auction.  In the end, I was able to win a condo at the auction for less than my upper limit.

Next up was the massive volumes of paperwork.  There was paperwork to sign for homeowner's associations, loan applications, property taxes and the list goes on and on.

For the loan I went back and forth numerous times with my lender.  He was really helpful and found ways to improve my credit score which helped me receive a substantially better loan rate.

Next, there was the signing with the title firm which then submitted all of the documents to complete the transaction.  And finally, picking up the keys.

Lessons & tips:

1. If you've never bought real estate before, ask a bazillion questions to your lender, the seller, the title company, and everyone else involved in the transaction.  If you're unsure about something, figure it out - especially if it involves money
2. Save money and pay bills on time.  This affects your credit score and how good or bad of a loan you'll get.
3. Remember that real estate is an investment that can be good or bad.  One startling revelation I had was that in the long run, real estate appreciates at rates no more than 1% higher than inflation.  Two sources confirm this:  Angry Bear and BusinessWeek.  While US society associates home ownership with personal success, it is important to note that in the long run real estate is more like a hedge against inflation.  I have a friend who still rents, but daytrades stocks for a living.  He says that real estate is a lousy investment compared to what he makes in the stock market - indeed if you are able to get a higher rate of return investing your money somewhere else then do it.
4. Consider the merits of Renting.  If your loan requires a large
   
   part of your monthly income you ought to take a hard look at whether it would still be better to rent.  Although I was approved for a large loan, I found that after a certain point well before my limit, the payments were so much that I could have made more money depositing the money in a CD (even at today's current abysmal rate of 1.75% APR) rather than purchasing real estate outside of my
   
   means.

Resources:

Estately
Exit133
John L Scott
Wells Fargo

---

Nov 24, 2009, 10:00PM PST | 0 comments | 1 cheer