Posted by Nate on March 12, 2001 at 17:48:28:
If you sign the sales contract as the principal of the seller, and as the buyer, they sure as heck will know!
Interesting concept, but I think you are assuming the lenders are dumber than they are. Furthermore, you still will have to come up with the extra $20,000 somewhere - no “phantom” down payments allowed!
NT
an idea - Posted by terryr
Posted by terryr on March 11, 2001 at 22:56:08:
pleasae tell me why the following won’t work for 100% financing?
1)step 1 - i set up a nevada corp
2) buy house at undervalued price via the corporation
3) resell from corporation to myself individaully at a price high enough so that 80% financing is really 100% of what the corporation (me) paid?
Re: an idea - Posted by krissy
Posted by krissy on March 13, 2001 at 21:53:32:
I’m not sure if I’m understanding you so my answer may not be relevant, but, if you have $80,000 cash and just want to get it out and use it again…why not just find the “undervalued” house buy it for 70%- 80% (or preferably less) of FMV and then take out a new equity loan to free up your $80k? No need for a corporation…This is how I bought my most recent property…and I don’t recommend it to anyone unless they are very, very sure of how to comp a house and determine its FMV pretty closely…I bought a “half-double” (that’s what half of a two family is called around here) for $17k cash (which I took in the form of a cash advance from my credit card…along with another $2k for closing costs,misc., and enough $ to pay back 2 months of payments on the card till I got the loan through). I have excellent credit and was able to get a H.E. loan for up to 70% of the FMV. Thank God, it came in at 41K (anything over $32k would’ve worked) and I took out a H.E. loan for 25k to pay back the credit card, painted, new carpet, new appliances,) So moral of the story…if you know you can buy for 70% or less of FMV, pay cash, then take a H.E. Loan to get your cash back and do it again. (Will that work in your case?) Also, beauty part of H.E. loan is there are no closing costs!! (At least not at my bank)
Re: an idea - Posted by Nate
Posted by Nate on March 12, 2001 at 12:12:45:
So your plan (for example) is to have your corporation buy a house worth $100,000 for $80,000 and then re-sell it to yourself personally, for $100,000.
Questions:
How is the corporation going to get $80,000?
If you have $80,000 in cash or financing available, why not just use that to buy the house?
Why pay the transfer taxes and closing costs twice?
Even if you are buying from a corporation held by you, you’ll still need the $20,000 in the deal. No bank I know of will allow a “phantom” downpayment on the grounds that the seller and buyer are affiliated. If they did, the sale might not even be considered a sale.
Nate
Re: an idea - Posted by Michel Payette
Posted by Michel Payette on March 14, 2001 at 16:39:17:
Krissy,
Would a H.E loan work for a 5 appartment house? I’m having a problem with this one. Older house ( 3,500 sq feet) which was converted into 5 appartments. Only 1 is rented at this time. Asking price is $13,500. (yes, that’s right!). The house is in need of at least $35,000 in repairs (roof, leveling, etc). Since it is located outside the hardmoney lenders’ bounderies in Dallas, I can’t seem to find any financing to purchase it. I have 2 weeks to close on it. My next move is to use the cash that I have on hand to buy it. Then what? I guess I could use my credit cards to fix the roof. Do you think a H.E. loan would be available for the repairs at that point? I believe the house after repairs would appraised $ 75,000. On the tax roll, it’s appraised at $40,000 in its present condition. Sorry for the long message. Thanks!
Re: an idea - Posted by terryr
Posted by terryr on March 12, 2001 at 17:26:27:
i have the $80000 as cash but i want to cash out and use that cash again - closing costs are very minimal on an all cash deal as are revenue stamps - the reason a corporation is used is so the bank will not know the two are afiliated
Re: an idea - Posted by krissy
Posted by krissy on March 14, 2001 at 20:05:26:
I’m not sure about a 5 unit-never did any multi unit deals- maybe somebody else would know about this- Sorry