How In The World Do I Do This?
Okay, I post a lot but it doesn't mean I know a lot....so here is something I can't figure out:
I have a 4 bedroom, 2ba house under contract with a homeowner for $37,000. The house is already appraised at $90,000 but it needs about $3,000 in repairs and then I can rent it out.
Unfortunately, like many others at this time I do not have the best credit and do not want to prove income, but obviously this is a great deal but I do not know how to go about getting it. The homeowner wants everything off of their credit and the house out of their name...so I thought (from my limited knowledge) that you could create a note for $90,000, then you could sell the note at closing to a buyer already wanting it...for a discount, say $70,000. I then get the $70,000, the lady is paid her $37,000 and then the note buyer gets payments for whatever the specified term length, etc is.
So what I am asking you all is what can I do? What are my options? Credit score is probably about 600 or lower.
Thanks,
[ Edited by joel on Date 02/11/2004 ]
Kid with that ltv you have so many options that you should come out with a bit of cash in hand and a mortgage that works for you. You might try and advertise for the money, go ahead and get your appraisal in hand. Oh and niceeee dealll.
Well, I agree with you, but again really don't know where to turn truthfully. Most of my stuff has been in lease-options, flips, etc and never really had to deal with lenders of this sort.
Like I said, not very good credit and don't want to disclose anything...so where do I go and what can I do?
Basically, what would I say and ask for?
Thanks,
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Christian Beebe [ Edited by joel on Date 02/11/2004 ]
Hey Solutions, nice deal !!!!!!!! As far as financing it, I would forget about the idea you had about creating that particular note and look for a lender. You may want to try a mortgage broker in your area, just call them and tell them your score and they can fairly quickly give you an idea of whether or not they would be able to find something for you. If you only need 50 to 60% of the FMV, then you probably would not need to qualify. If you cannot find someone in your immediate area, this website lists lenders that look like they would be able to help you out. Worst comes to worst, advertise in the paper that you will pay 10% on $50,000 and that it would be secured by real estate. Where else could other people get 10% on their money?? Let us know what happens !!!!!!!
If the house has a 90K market value, needs 3K of work and you only have to pay the owner 37K why don't you find someone to "assign" your contract to for say 30K and let them worry about getting the financing to execute the contract and pay off the owner. That person would be getting a 90K house for 67K...not a bad deal.
You now have 30K to work with for your next deal and banks always seem more willing to work with people with questionable credit when they come to the table with 30K
Good Luck,
Q
If you can't find something through a mortgage broker, you could do a hard money loan - especially if it's going to be short term while you look for a buyer. If you plan to hold and rent, (did you say that??), then you'd have to be in a position to refinance down the road. Which I wouldn't worry about with the equity that you are talking about - even with your credit situation.
I bought a great deal last July with hard money and will be doing a refi in the next couple of months. Even with a 17% interest only loan, (tax deductible interest), I make a positive cash flow each month as a rental. Work your numbers and see where you are. Sounds like too great of a deal to let get away.
Buy it. Find a way and buy it.
Good luck,
Noel
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I suggest you submit the deal to several Hard Money Lenders.
With these numbers you should not have a problem.
Get the property fixed up, and then work with a mortgage broker to refinance.
You'll be fine.
Congrats with what looks like a great deal.
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Luctor et Emergo[ Edited by Hawthorn on Date 02/04/2004 ]
I work as a mortgage broker and just wanted to add that when you are buying through a conventional lender, they always run their ltv's off the lesser of the appraised price or the sale price. So in this scenario you would have to qualify under a lenders ltv criteria for your score off of the 37k. For the purchase it doesn't matter to them whether the house is worth 37k, 90k, or 250k. However, with it being worth 90k, maybe you could set the sale price higher and have the seller hold back a second to work out a no money down. Then make sure that the seller would forgive the debt. Let's say you qualify for a 70% ltv with a lender then mark the sale price up to 53k so the first mortgage would equal the 37k that the seller is looking for. Then have the seller discharge the second mortgag.
If I am understanding you correctly: your score is low AND you don't want to disclose anything.
In my humble opinion, that leaves one option and that is hard money. No matter how creative you are with lenders they will still want full disclosure and that is not what you want to do. With hard money, it seems like this deal would be no problemo....
Good Luck and let us know what you decide.
Not all lenders require full documentation. There are enough lenders that will do a no doc/stated income even with high debt ratio. There are even a few that I've found and used where you apply online. Try the lenders tab above or if I'm allowed by TCI??? - I will share the name of one of my online application lenders.
Hard money is where I would turn if I were in a hurry or couldn't do it the no doc/stated income way.
Good luck,
Noel
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