I follow a very popular blog on marketing and business by entrepreneur and best-selling author Seth Godin.  For months, I have been inspired by his daily posts on how the business world has changed and how in order to survive in business today, we must change and change our businesses respectively.

I recently finished one of his books, Tribes.  It was an interesting read and inspiring in so many different ways, however his perspective and use of the word “heresy” caused me to stop and think.  He uses this word to describe rejecting the status quo. But, heresy is a rejection of truth… Who am I listening to?

I thought back on my experience as an Assistant Manager at Radio Shack when I was in high school.  I remembered when bread winners from the local Section 8 housing would stop by on Thursday nights after they got their paycheck.  They would be looking to buy a much “needed” cell phone.  Undoubtedly, today a cell-phone is much more of a necessity, but in 1998 it wasn’t necessary, and some would certainly argue that it still isn’t a necessity for people in government housing.  As a representative of Radio Shack, I was never taught in ethics concerning selling.  I was expected to sell legally and with proper information, but I had to make decisions about how to sell.  I would often decide to recommend the “cheapest” phone or, when I knew a customer couldn’t afford the regular monthly services, I would deter them altogether from the purchase.

I learned back then, that it is not my responsibility to determine how others should spend their money.  However, I do have an ethical responsibility to my community and to society, so I still make some degree of judgement call when it comes to selling a product or service.  Fortunately, I have much more experience and education today to help me along the way.

This brings me back to “heresy”.  We all filter out the good from the bad in the news.  We try to listen to both sides and make our own decision, following our conscience when determining right from wrong.  What about where you work though?  Do you overlook the “white lies”  that you are saying to yourself or to your clients?  When we are fully absorbed into an institution many often break the rules in the name of capitalism.  Profit and margins are the business sides.  Quality, benefits, and affordability are the customers concern.  But we all must be concerned with the customer’s overall well-being.  We must be concerned with the society they live in.  We have to be attentive that we are not being “heretics” by rejecting truth and creating our own stories.  Be a trend setter, break the rules that don’t really matter…they are just guidelines. But, be every watchful of proclaim the truth.

For me, my means required me to develop a sensible budget.  I did the calculations and realized that if I wanted to furnish the home with decent furniture and have a nice home theater system then I could afford a mortgage with 5% down of $100k-$130k.

So there I was, ready to go house hunting.  I took my wife out and showed her a few homes in my price range – unfortunately though, they were not areas she felt safe in, nor were the sizes or conditions of the homes I was looking for suitable.  For that price, we really needed to be looking at a town home or condo as opposed to a house with 1500 sqft or so.

My primary concerns were having land, so retooled my search and Claudia and I discussed purchasing a home up to $150k with the agreement that she would continue to work once we had children.  My new focus was .5 acres – which is a tall order in the Metro Atlanta area.  Fortunately for us, foreclosures were on the rise.

We found our future home and set our paths on purchasing it.  I found a local realtor search tool through HUD’s website and met our idiot realtor at our future home.  The foreclosure process is a bear, but here are some quick and simple facts about purchasing a HUD home.

• FHA loans are the direction that HUD homes are usually purchased.  The loan is backed by the Federal Government.  You only have to put down 5% of the home, but you have to pay for HUD’s mortgage insurance up until you own 20% of the home – a few years.  Also, you pay for the insurance over 5 years and it is not refundable so make sure you are prepared for these costs.
• Fixer-upper – 203K.  Since I assumed that I would be fixing up my home as a foreclosure, I explored the reality of a 203K home loan which is an FHA loan that allows you to roll-over the renovation costs into your home.  However, a standard 203K loan requires serious work.  1) Estimates from state licensed contractors (on a home you don’t yet own), 2) Architectural Drawings for any modifications to the structure, 3) permitting costs and much much more.
• HERE TO SAVE THE DAY is the 203k(s) or “Streamlined Renovation”.  The problem with this bear is that you need to find someone who can do it.  I found an underwriter that did a great job, but you need to prepare yourself to backup any non-contractor type repairs indicating that you have the competency to do them yourself.  It is a challenge, but once we started it, then we pushed right through and did it all ourselves with a “self-help” agreement.

My lesson is to just research more ahead of time and prepare for the unexpected.  Our costs were roughly what we expected and it all worked out well, but I believe that a few simple mistakes in our planning and it could have gone completely different.

Just so you know what objectives we accomplished with our 203K(s) renovations.  Here is our Self Help Agreement: