cash back at closing???? - Posted by Evelyn

Real Estate Investing Real Estate Financing
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Posted by evelyn (FL) on April 27, 2001 at 16:20:53:

okay. diet coke it is. Malabar and Palm Bay HOT FOR SUBJECT TO’s??? What do you mean by that?

and by the way…I’ll put up the bandit signs around here…thank you very much! :slight_smile: Actually, there are already some around.

Please let me know about the subject tos. If it’s too lengthy to, call me. I’ll give you my home phone number off the board.

And I’d love to partner up on something, when I think I have something you might be interested in I’ll let you know. I know of a boarded up house two minutes from me…been that way over a year! tax assessor says it’s worth $39k.

Evelyn

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cash back at closing??? - Posted by Evelyn

Posted by Evelyn on April 26, 2001 at 19:54:14:

can someone give me an example of a deal where they received cash back at closing…had an idea, just want to meke sure I am on the right track here.

evelyn

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Speaking of cash… - Posted by Rolfe Kurtyka

Posted by Rolfe Kurtyka on April 27, 2001 at 13:49:23:

Hi Evelyn;

…just received the Good Faith Estimate from the mortgage company. Using the method I described below, the bottom line says;

“Total Est. Funds to you: $11,414.55”

Yea! Rolfe

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Re: Cash back +++! - Posted by Rolfe Kurtyka

Posted by Rolfe Kurtyka on April 26, 2001 at 21:23:12:

Evelyn;

I’m a rehabber, so we rehab our way to cash back at closing. For a rehab, it takes money to make money, just not any of MY money. All borrowed.

The appraised after-renovation-value of the property must be at least 25% to 30% greater than the amount of money borrowed to buy and fix-up the property. After renovation, the property is refinanced with a loan for 75% or 80% of the property’s renovated value. Done correctly, the refinance mortgage exceeds the costs of purchase, rehab, and associated finanace and carrying costs. Boom. You recieve cash at closing.

This cash is really borrowed money, which your TENANTS PAY BACK FOR YOU!

Cash received in this manner is not taxable income. It’s really debt. Lenders tell me they do not want me to pocket TOO much cash at close, but will fund the project costs plus a little “walking around money”, which usually amounts to $5,000 to $10,000. That’s some nice walking where I come from.

You know the drill from there; the property must generate enough rent to exceed operating expenses and the debt service. If so, you own a rental property asset, have NONE of your own money into the property, received cash at closing, have 20% to 25% in equity to show on your balance sheet, and you spend the cash flow on something frivolous, like a car payment :~)

To make matters worse, over the years you’ll benefit from any appreciation and rental increases, and the mortgage will have been slowly paid down. After 5 to 7 years, consider a 1031 exchange, and move the equity into a larger property. Repeat as desired.

All this, and you received cash at closing. It’s a beautiful thing.

Rolfe

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Re: cash back at closing??? - Posted by Anna-WA

Posted by Anna-WA on April 26, 2001 at 21:06:08:

I have found the easiest way to get cash back at closing is to find a way to get the deed, then refinance to pay off the seller. I have done this by promising an owner who is willing to carry the contract a payoff within 30 days or just taken the deed subject to financing from a desperate seller. I am in the process of doing this for the 8th time is 6 months. My experience is that it is fairly easy to walk away with cash from a refi at 80% LTV. So if you buy right, you can pull cash no problem. Just a thought…

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Re: cash back at closing??? - Posted by Jonathan Rexford

Posted by Jonathan Rexford on April 26, 2001 at 20:34:17:

I bought a home last may for 45K. I borrowed 60K from a private lender. I paid three months interest at closing $2250.00 I had closing costs of $1100. I walked away with 11K and change. I sold the home for 89,900 and got cashed out.

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Re: cash back at closing??? - Posted by SCook85

Posted by SCook85 on April 26, 2001 at 20:30:09:

Evelyn,

With hypothetical examples I could give you dozens of scenarios, however hypothetical examples don’t always work in the real world.

Typically to get cash back at closing you have to borrow more money from the lender then is needed to pull the deal off. If you are dealing with conventional loans through institutions this is almost impossible today- at least if you are doing it ethically. Lenders have stopped allowing borrowers to walk away from the table with cash in their pockets. They typically lend a percentage of the purchase price or the appraisal whichever is less, thus not allowing someone to borrow based off of the appraised value when their purchase price is much lower.

Now if you have a line of credit where your bank will lend based off of assesed values, or a really good relationship with a small local bank who will lend to you based off of appraised value then it may be possible to cash out at settlement.

I am able to occasionally cash out at settlement using hard money lenders. They typically don’t have the same rules that banks have, however they don’t let me cash out with a large sum of money. They will however escrow money for repairs and release it to me when repairs are done.

I hope this helps,

Steve

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can a get a … - Posted by evelyn (FL)

Posted by evelyn (FL) on April 27, 2001 at 15:26:06:

H*LL YEA?!

way to go, rolfe!!!

evelyn

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Okay…I get it now… - Posted by evelyn

Posted by evelyn on April 26, 2001 at 22:17:50:

Thanks for the explanation. I was thinking along the same lines but was not quite sure.

evelyn

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Re: cash back at closing??? - Posted by Vic

Posted by Vic on April 28, 2001 at 02:13:06:

What type of loans are you getting - regular conventional? Have you run into any problems with seasoning yet?

Vic

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Re: cash back at closing??? - Posted by evelyn

Posted by evelyn on April 26, 2001 at 22:20:31:

okay…I get the hint…buy it right. Gotcha!!
Also, your 8th one in 6 months…whew!

Evelyn

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Re: cash back at closing??? - Posted by Rich

Posted by Rich on April 26, 2001 at 21:10:51:

Would an example of doing this be:

Having an owner quit-claim the deed to me before we go into the bank to refinance (this way I appear to have owned the property for some time so the bank is less likely to have a problem lending the $$$)?

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Leave Palm Bay to me…please… - Posted by evelyn (FL)

Posted by evelyn (FL) on April 26, 2001 at 22:27:19:

Hi Jonathan,

It’s evelyn up I-95 in Palm Bay. When you are in this area again…give me a yell and I come meet you and buy you a cup of coffee…or a bottle of beer…sorry, I’m not a beer drinker…coffee is my poison!!

thanks for the post. I think I am getting the hang of the cash back. You’re not buying these homes on the cheap in Palm Bay, are you? :slight_smile:
let us locals get some of the action. LOL
evelyn

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Re: cash back at closing??? - Posted by evelyn

Posted by evelyn on April 26, 2001 at 22:29:26:

and whatever is left over after repairs is yours I assume…assuming there IS SOMETHING left over?

Am I on the right track, Steve?

evelyn

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Re: cash back at closing??? - Posted by emelda kador

Posted by emelda kador on March 03, 2002 at 14:48:37:

you promise the owner who is will to carry a contract
a payoff in 30 day. you put a contract on the property
and the seller waits 30 days for his money for the closing. what do you mean the seller carrys a contract???

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Re: Leave Palm Bay to me…please… - Posted by Jonathan Rexford

Posted by Jonathan Rexford on April 27, 2001 at 07:09:19:

Well it was almost Palm Bay. It was in The Vero Lake Estates area. I am not a beer or coffee drinker. I let you buy me a Diet Coke though. Evelyn, You are in a very hot area to do a lot of subject toos. Especially around the Malabar area. If I was you get those Bandit signs out there. I would come up there but its 35 miles for me t drive. I can’t put the signs out. But I can do post card mailings…Idea. I could hire someone to put the signs for me…lol. All fun a side. We as investors are always say deals are better somewhere else. I guess its the nature of the beast that keeps us looking. If you want to partner up or just kick one around I am a phone call away

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Re: cash back at closing??? - Posted by SCook85

Posted by SCook85 on April 27, 2001 at 08:35:15:

Evelyn,

Yes, depending upon how much the lender lends you, you may be able to put money in your pocket from your rehab.

Steve