How Could I Creatively Finance This?
I have a situation where my father-in-law is financially overextended. He is retired and has been living on equity for the past several years and within 3 months he will be out of money.
He owes about 205K, and wants to refi again to get more equity out and fix up the property and then sell. But due to his lack of income and LTV, I doubt if he will be able to get a REFI as he has already been turned down by one lender who works with sub prime clients. My personal feeling is that the house is probably worth 265-290 repaired.
I'm trying to figure out a way to help him out. The maximum I could really get for the property as a rental is 1300/mo. on the open market. The fixed rate mortgage alone would be 1500/mo with an additional 3000/yr for property taxes and insurance, though an ARM would help greatly.
If he were to get a REFI, he would be paying 1500/mo and if he did all of the repairs himself. He really wants to get out of the property badly, but also needs the money to live on.
So my question is this. He is my father-in-law. I have to be able to look him in the eye everytime I see him and know we both did the right thing for him. Other than buying and flipping the property, are there any other ways I could work this out to help him?
Thanks,
Robert
Robert,
The one thing you left out is how much does the house need for repairs?
I guess it all depends on how much you value family and your relationship with you FIL. Perhaps you could help get the house refied to do the repairs so it can be sold. Then he is out of debt and can start over. I suppose if you don't really like him you could tell him you'll help with the refi, but wehen it's sold you want 50% of the profits.....
An afterthought...if the repairs aren't too extreme and there's that much equity in the property get an interest only loan. This will free up some cash anyway you go.
Good catch. Thanks.
I think the repairs are fairly straight forward. Dry rot on the eaves and a small porch. Maybe $5000 total if hired out. Since my father-in-law is a former general contractor, he could easily do this himself for under $2K.
The biggest issue is he collects everything, so there is 40 years of junk collected that only has value to him. This would probably cost $2K just to have hauled away.
Thanks,
Robert
Why not just sell as a fixer or get a contractor to partner for part of the profits.
Just my 2 cents..
Barbann
Why not just sell as a fixer or get a contractor to partner for part of the profits.
Just my 2 cents..
Barbann
My father in law would rather do the repairs himself and make some money out of the deal too. I'm just trying to find a way to help him do this. Maybe the best solution is to buy the house, provide some capital, then resell while splitting the equity with my father in law.
Thanks,
Robert
My father in law would rather do the repairs himself and make some money out of the deal too. I'm just trying to find a way to help him do this. Maybe the best solution is to buy the house, provide some capital, then resell while splitting the equity with my father in law.
Thanks,
Robert
Look into a reverse mortgage.
Dave,
I had actually been thinking that a reverse mortgage might be better for him. Thanks for the suggestion!
Robert