Please Help Me Structure Deal
Here is the situation. I lost my job and have depleated funds. I got pre-qualified for a loan at 80% LTV and 100% CLTV with stated income (pretty lucky since my scores suck). I have no money to put into the deal and need to do it no money down. My loan minimum is 50k, but the duplex I want is 35k. Is it possible to get a loan for 50k and get back the 15k from seller? My broker doesn't think so. If it is possible, how do I structure the offer/deal. It is a MLS listed property so ther will be a RE agent involved.
My secondary objective in getting some property is to get cash at closing (5-10k) so I need suggestions on doing this with other deals also(50k+)
Thanks
Marv
You may need to use a hard money lender to pull off this deal. Why is this duplex priced so cheap? Have you asked for owner financing? You may be able to get 1/2 the money from a hml and the other half from the owner,but only if you ask!
Hi Marv:
There are several ways to get money back at closing. One of the ways is to
go thru a hard-money lender as mentioned above.
You could also have the seller make the purchase price $50k and put a "repair" bill ino escrow paying a contractor friend of yours for repairs. He then kicks the money back to you.
You could also turn right around and take out a 2nd after you purchase the
property.
Best Riches,
Jeffrey Adam
[ Edited by JeffreyAdam on Date 03/10/2004 ]
Sorry guys, but hard money lenders do not give any cash back at close. Although I could be mistaken, I have spoke to over 20 HMLs in the past couple of years and this seems standard.
-Chris
[addsig]
If your lender will loan 80% LTV using the appraisal and not the sales price, any appraised amount over $44k would go to you at closing less closing cost.
Not all lenders will do this but if they are agressive and that need your business they will.
My strategy with lenders has always been to give them all the information they need to make a decision (perspectus, pro forma, budgets, plats, appraisal, financials, tax returns, everything) in a nice, neat package and then tell them the exact terms they are going to lend me money. When they laugh at me I stand up shake their hand, thank them for their time, walk out and go to the next bank. Usually I can find a lender who will do business on my terms or close to my terms.
One thing to remember about lenders is the difference between regulations (law)and policy. No lender will break the law for you but they can and will bend the bank policies. So when they tell you they can't do something because of bank regulations make sure they don't mean bank policy.
Banks are in the business to lend money. If they have confidence in you and think that you are going to be a good customer they will bend over backwards to get your business.
Obtaining a loan from a bank is a negotiation. Banker's respect strength so negotiate from a position of strength.
Quote:
On 2004-03-10 04:01, c-brainard wrote:
Sorry guys, but hard money lenders do not give any cash back at close. Although I could be mistaken, I have spoke to over 20 HMLs in the past couple of years and this seems standard.
-Chris
After doing over 100 hard money loans, it is quite common in California to get money back at close for rehab if you
are purchasing right. Usually they will do this in draws with the first draw coming at the close of escrow and all
subsequent draws being paid as the work gets completed. The hard money lenders I have worked with in the past
have even put 6 months payments in reserves as well as provided money for rehab cost. Vanguard Funding is a good
hard money lender in Fullerton, California.
Best Riches,
Jeffrey Adam
_________________
"The only place success comes before work
is in the dictionary."
[ Edited by JeffreyAdam on Date 03/10/2004 ][ Edited by JeffreyAdam on Date 03/10/2004 ]
[quote]
On 2004-03-10 04:01, c-brainard wrote:
Sorry guys, but hard money lenders do not give any cash back at close. Although I could be mistaken, I have spoke to over 20 HMLs in the past couple of years and this seems standard.
-Chris
Chris
Well they do in Ohio, Nj, Fl, Va. and Pa.
That I am sure of because I closed a HML in every state last week
Marv
There are also loans avaible to buyers for up to 90% of the ARV. This would take care of your problem. If the house appraises with at least a subject -to -appraisal for 65k
Lori
[addsig]
John is right. I would like to get some cash back to:
a) Pay bills
b) Make the next deal easier to close.
I need to start offsetting my personal monthly expenses ASAP. Cheap mult-family houses are what I figure will get my cashflow up to where I need it quickly. Houses in Detroit are extremely cheap, but so are rents. The duplexes I have looked at are 35k-55k with minor repairs and typically gross about $1000/month. So for the specified deal, I am trying to make it work with 50k and take back 15k. The problem I see is with the 80% LTV. I can take a 20% note from owner, but doesn't this start to get complicated? This makes the selling price 60k for bank purposes, loan amount of 50k, seller note for 10k, seller return of 15k to reach true selling price of 35k. How can this work without me getting shafted of running into some ofther hiccups?
BTW I love all of the replies so far. Thanks to all giving advice!
Marv
Also, My credit scores are poor (560 middle) so I don't have many credit options. I was lucky to find one to do a deal off stated income.
Marv
[quote]
On 2004-03-10 11:51, active_re_investor wrote:
Funds set aside in escrow for repairs is not really cash back.
I think the point was HML will not give you cash to put in your pocket. They want their funds going into the property.
--------------------------------------------------------
When you close escrow and the HML hands you a check that same day, what happens? You go to the bank, cash the check and put the money in your pocket!
The original poster did not specify what he wanted the money for.
Hard money lender will typically lend you
65% of market value. If you establish a
good repore with them, I have seen them
give back money and it does not necessarily have to all be for rehab.
Best Riches,
Jeffrey Adam
_________________
"The only place success comes before work
is in the dictionary."[ Edited by JeffreyAdam on Date 03/10/2004 ]
Sounds like you need to find another deal. It is possible to get cash back from the seller, but your gonna need more room to play in the deal. It's also alot easier when you are dealing directly with the seller and not dealing with an agent. Agents aren't used to creative deals and they scare them. Also their commission would eat up some of your room in between the sale price and the appraisal price which in your situation you need all the room you can get.
_________________
President NW Wayne/ SW Oakland CREI
[ Edited by loanwizard on Date 04/02/2004 ]