Immediate Cash-out?
Here is the situation:
Duplex for sale - $21,000
Monthly Rent - $625
Recent Appraisal - $35,000
Owner has relocated and obviously property not in greatest neighborhood.
My plan is pay $21,000 cash. Then I'd like to get a 100% loan (or 90%) on the appraised value ($35,000). Which to me would be like an immediate $14,000 tax-free gain (less misc expenses).
By my calculations, this will still be slightly cash flow positive even with paying someone else to manage the property.
My question is, will I be able to get a loan on the $35,000 value without owning the home for some period of time? Also, I know loans that small can be difficult to find as well. I do have good credit (700+) and income.
Obviously all this contingent on passing inspection - no major repairs..etc..
Any thoughts on this plan - is it doable?
Yes it is possible to get a loan in that short time period. A Mortgage company will treat is just like a refinance with all the fees that are associated with it. When you do get a conventional mortgage broker to write a loan that size the closing costs are going to be high for the size of the loan... very painfull.
I recommend going to a local bank and getting an in house loan secured by the property. My bank will write one based on the tax assessors value (no appraisal costs), no PMI, 90% of assessed value, with virtually no closing costs.
The interest rate is competitive if not better than a conventional mortgage but they won't do longer than 15yr and won't do a fixed rate for more than 5 yr. Even with these limitations the savings on closing costs make it a better choice. Especially, if you plan to cash out again when the property has coniderable equity again.