Financing Advice
We are considering the idea of buying a house in our area (bedroom community of Detroit) , fixing it up cute and reselling to make a nice profit. Fixer-uppers go fast so we would have to be ready. What do you recommend as the best way to pay--a line of credit on our own home, a line on another investment property (each around 4% but limited to $50,000 and $88,000 respectively) or a balloon mortgage at 5+% plus fees, etc. We would have a hard time finding anything for less than $130,000 that would not require alot of structural work. Also, I was talking with a mortgage broker who said there are some new laws about 'flipping' that I should be aware of--what is that all about??Jane <IMG SRC="images/forum/smilies/icon_rolleyes.gif"> 
[ Edited by swayzefam on Date 03/08/2004 ]
As far as financing goes, you need to pick out what works best for your situation. When I talk to REI's I find out what their intentions are with the property.
1) how long do you intend to keep it?
This will help with the type of loan.
2) is it a rental?
3) Is it a flipper?
4) HOw much work needs to be done?
5) how long will the work take?
These are all questions you need to talk about with the lender you are planning to deal with.
The second part of your question about LAWS
There are no laws that say you can't "FLIP" a property. There are many types of loans that don't have seasoning issues. There are many types that do, again you need to find someone that you can work with that fully understands your goals. They should be knowledgable in REI and in creative financing.
Hope this helps
Lori
[addsig]
i am a broker. your best bet is to get a fixed / ballon with no pre pay rates are low. you are going to move in there. this will give you a lower rate..
Quote:
On 2004-03-08 13:36, swayzefam wrote:
We are considering the idea of buying a house in our area (bedroom community of Detroit) , fixing it up cute and reselling to make a nice profit. Fixer-uppers go fast so we would have to be ready. What do you recommend as the best way to pay<font size=-1>[ Edited by swayzefam on Date 03/08/2004 ]</font>
As was already noted, the specific answer depends on what you want to do with the property after you have completed the work.
As a general rule, obtain as much finance as you can with little in the way of up fees. The idea is you will want the funds or the facility in place if a good deal comes along. If there is a minor cost to having the facility set up just consider it the cost of doing business.
Be smart with how you use the funds and think about your exit strategy as you might find that you can make the sale go smoother depending on how you purchase. The point you raise about flipping and the seasoning of a loan is what I am talking about.
John