A Way To Buy Properties With Basically No Money Out Of Pocket
Have to ask if anyone is familiar with this type of buying rental properties. I have been searching and searching to try to get the best deal without too much money out of pocket for these three rental properites I want to buy and this guy from a bank gave me this idea. I would first do a land contract with the sellers for 1-3 months with a clause in the agreement that in three months I would refinance and get a new loan. So the guy said basically I would have little out of pocket expense except for the normal closing costs like title, taxes, insurance, etc but he said I would not need any money down since this would be a refinance. He says it is totally legal to do it this way. Has anyone ever anything like this? If I understand it correctly, I think this is a great way to buy rental properties without a big downpayment.
Yes it is legal. Yes it has been done. Get a lot longer than three months. I'd say at least a year. Three issues:
1) Commercial loans typically take three months to process. Every banker will tell you his bank does it in 30 days. Don't believe him. And what happens if the first bank turns you down.
2) Some banks will have seasoning issues if you buy within 6 months or 1 year of the refinance.
3) The property has to appraise for 20 to 30% more than you paid for it.
Okay great. Yes, I did know about that appraisal and I Don't think that is going to be a problem even three months later because they are seeling me these properties below the tax assessed value. I am getting a real great deal on these.
I think I e-mailed you before on this one, so hello again!
I think that you should be fine. Being a mortgage broker myself, I have never heard of "final audit" so I am not exactly sure what that means. But I am going to assume that it just means that they are going through the file to make sure all the documentation they need to "sell" the loan to another investor/lender (RARELY will lenders actually hold on to your loan). It is strange though, that final audit will take more than a week. To me, it seems like they are dilly-daddling (spelling?) around. A refinance especially should not take this long, even if it is a holiday season. Good luck to you and happy holidays! 
Thanks so much for the reply...can you tell I'm a bit panicked?
I absolutely hate having credit card debt and just want it gone.....I wil keep you posted
Your welcome. If things don't work out, give me a call and lets see what we can do. Best of luck, however!
I understand your panicked, but the best thing to do is relax, NOT harass your loan officer (that means no calls more than once a day!) and just let him/her do their job. The more you call, the less time they have to work on your loan. But good luck to you.