I'm trying to buy a house in the Wick Park Neighborhood, and everything was going fine until this week. The appraiser (via the bank) said he can't appraise the house because it's located in an area zoned institutional. (according to the county auditor's website, the land use is "Two family - on Commercial") This put the brakes on everything. The bank tells me they aren't sure they can lend money on a house intended to be a primary residence in such an area. I'm not sure I would even want to persue a commercial loan because I assume that would be more expensive.
The owner was also unaware of this. But, this house, and the neighboring house has been in his family for decades. And, many of the other houses on the street are no longer used as residences, or are rentals.
I'd consider trying to buy the house on land contract, but I don't think the owner would be interested. He's had some interest from other parties, (I'm only saved by the purchase agreement) and some of them are probably able to pay cash for the property.
I know at least one of our other forum members will also run into this issue. So hopefully, someone (real estate professional or councilperson) has some advice. ??? :'(
Doesn't sound right, call Rey Decarlo of City zoning and ask him to look up the zoning. Do not count on the auditor site only. Owner occupied property from what has always been the mortgage lenders policy are the easiest loans to approve.
It looks like I might need to find another bank.
According to these maps, "my" property is definitely zoned Institutional.
http://cfweb.cc.ysu.edu/psi/bralich_map/youngstown_zoning.pdf
http://cfweb.cc.ysu.edu/psi/bralich_map/120_neighborhood_current_zoning.pdf
When you speak to Decarlo, he will refer to the zoning ordnance manual (green book). Under your zoning classification, there will follow a "permitted use" list, I guarantee you that one of the permitted usage will be residential single family. Many with a keyboard here think that if they google a subject, the first thing that pops up is all they need and refrain from digging deeper. The strength of your loan application is going to be how you secure a lender, the issue I think you are not seeing is that your lender does not feel the collateral secures the bank enough. If you can insure a good equity position by way of a discounted price of a significant down payment, this should entice the lender.
I'm not sure I understand what you're saying. Are you saying that I need to provide proof to the bank that residential is a "permitted use" at this address, so they can go ahead with the appraisal and loan? Or, are you saying that the bank doesn't really care about this zoning issue, and I need to come up with a larger down payment?
Maybe both.
As has been stated before, Zoning deals with land use. 1st residential, 2nd Institutional, 3rd Commercial & industrial, 4th Mixed use. Residential is your domicile(where you sleep at night), however you are allowed to have a home office only in this class. Institutional means that its use is for offices( doctors, ins. agencies, etc. I bought a house in this class and opened my appliance repair office . Finally the C &I is for retail,manufacturing etc. For as long as I can remember the city has used the tool of "spot zoning" , thus allowing Commercial business' in the first two classes(Mixed use). This is done thru council. Finally , you are not allowed to have a business such as a auto repair shop , lawn care, tree cutting, roofing,etc in a residential zoned area.
Anything new on this Westsider? Have you resolved the zoning issue with the bank?
Quote from: Shar on August 19, 2010, 06:50:32 PM
Anything new on this Westsider? Have you resolved the zoning issue with the bank?
No. I called the bank today, and they are still "researching."
Last week, I called Ray DeCarlo and asked him about this. He was as shocked as I was that this is a problem. The house is considered to be a legal non-conforming use. He was nice enough to send me a letter saying so. I got the letter the next day, and faxed it right over to the bank. But, it doesn't seem to have helped.
Thanks for asking.
Westsider:
An appraisal is scheduled to be conducted on the home I'm looking on Elm as well. I'll keep you posted as to what comes of things on my end.
Finally academia is speaking the truth and more voices are being heard, until Ytown allows cottage industry and not just pie-in-the-sky tech jobs to come into our neighborhoods the City will continue its downward spiral. Where are all the urban agriculture projects that we keep celebrating and no, a little garden on an abandoned city lot is not going to infuse jobs. We need a concerted effort to farm on a large scale, farming is the largest industry in Ohio, it can be the largest industry in Youngstown. We need to get educated.
I apologize, my post was intended for "Youngstown neighborhoods topic."
Well, I have an update.
The letter from the city did help, and the bank appraised the house. Unfortunately, it only appraised for $15k. And, even if the owner and I renegotiated a lower selling price, the bank is unwilling to lend money on the house because it needs too many repairs.
I'm not done yet, though. I'm going to ask the owner if they are willing to act as the lender.
If the seller holds the note then he makes the interest and not the bank. Where else can you get 4.25% interest right now? On a 10 year note he'll make an additional $3,400 on the sale. On a 5 year note he'll make $1,700.
Oh, I wanted to ask...
If you buy this house will you change your screen name to "Northsider"?
Quote from: Rick Rowlands on August 26, 2010, 05:48:35 PM
If the seller holds the note then he makes the interest and not the bank. Where else can you get 4.25% interest right now? On a 10 year note he'll make an additional $3,400 on the sale. On a 5 year note he'll make $1,700.
That's a good point. The person who told me about a purchase money mortgage suggested a 1-2 year term, at which time I'd refinance with a regular bank. But, the owner may be interested in a longer term to make more interest.
Quote from: Rick Rowlands on August 26, 2010, 05:49:26 PM
Oh, I wanted to ask...
If you buy this house will you change your screen name to "Northsider"?
Maybe, or I might just change to the other internet name I've started using on other forums: JRC.
Rick has a strong point, if the the seller finances the house with a balloon in three years and amortized for twenty, your payments will be so low that you can apply the rest to renovating your house. Once you approach your balloon, when you seek a mortgage, it will be easier to secure because you now will be REFINANCING in lieu of an outright speculative purchase. I have done this many times as an owner financing.
Good point, Ron...and Rick.... well stated!
The other advantage is that when the balloon payment does come
due, the house will already have been renovated - thereby giving it
a higher appraised value when the owner applies for re-financing.
:)
I can't believe it's taken this long, but I finally got in touch with the owner this evening, and he told me that he isn't interested in entering a land contract. He has been advised by his attorney not to enter into a land contract deal. The specific reason was because the purchase price is so low, causing the down payment to be too small to cover the cost of foreclosure if I would default. But, generally, the attorney is against land contracts because the law favors the home owner, and a land contract can't be written solid enough to protect the seller.
I haven't quite given up yet, and am exploring other options. I just have to figure out what they are...
Westside,
See if this is a better deal for you. 2122 Elm Street on two lots, a probate sale, I have not seen the inside, I'm sure it needs some work, overall not bad. Message me if interested.
Thanks for the thought, but that's out of my target area.
A final update on this house.
After the owner said he didn't want to do any kind of land contract, I went to another bank to pre-qualify for a "Fannie Mae Home Style Renovation Mortgage." As part of this program, I needed to have a contractor walk through the house, and generate an estimate of cost to repair. If the purchase price and the cost to repair add up to less than or equal to the house's value AFTER the repairs are made, they would lend me the amount of the purchase, plus the amount of the agreed upon repairs.
I told the owner how this works, and let him know that I would need access to the house for the contractor. I followed up with him tonight, to make an appointment for the contractor, and he told me that this was becoming too much trouble, and he didn't want to sell the house right now, unless someone was able to make a simple offer. (cash or a conventional mortgage) Instead, he said he will have the repairs made himself, and will rent it out next spring.
I'm still interested in buying and fixing up (if necessary) a house in the Wick Park Neighborhood, but I'm giving up on the house this thread was made for.
So the owner won't sell it on land contract to an obviously willing and motivated buyer, but would fix it up and rent it out and take the risk that the renter will trash it. Someone is not thinking clearly.
Quote from: Rick Rowlands on December 07, 2010, 11:22:23 AM
So the owner won't sell it on land contract to an obviously willing and motivated buyer, but would fix it up and rent it out and take the risk that the renter will trash it. Someone is not thinking clearly.
I agree.