Ed help - Need financing - Posted by Martin

Posted by Cedric on January 13, 2004 at 22:33:07:

How poor is poor and which national lenders are you talking about

Ed help - Need financing - Posted by Martin

Posted by Martin on January 12, 2004 at 18:56:59:

I control a property in MD on a LO basis. My option price is $151k and the comps in that neighbourhood is $285K.
I want to exercise my option by buying the property and pull some cash out. Problem is that, I am self employed and credit is not that strong. Besides a partner, any leads as to which banks out there, would be willing to do this deal?

Re: Ed help - Need financing - Posted by Ed Garcia

Posted by Ed Garcia on January 13, 2004 at 09:35:10:


I think the easiest way to do the deal is to refinance it Sub-prime first, getting the property in your name and then take out a second with Beneficial finance, HFC, City Finance, American General to name a few finance companies.

You don?t give us any detail has to how long you?ve lease/optioned the house, your credit score, what LTV you think that you?ll be etc?

Here are 9 ways to do a deal with bad credit,

(1) PARTNERHIP: Find a 50/50 partner. It don’t have to be 50/50, it can be what ever you can negotiate.

(2) FLIP: the best way to flip is to find a potential buyer first and then find a property. You can do this by running an ad on a property to see what kind of action you get. Once you have a potential qualified buyer, you’d be surprised how easy it is to find them a house.

(3) LEASE OPTION: Many times you can buy and sell with a lease option. We call this a “Sandwich Lease Option”. Jim, I’m not going to go into any great detail, you can find this information all over this forum.

(4) SELLER CARRY BACK: This is one of, if not my favorite way to buy. Now the best way to utilize this system is to do a second seller carry back in order to give the seller some cash in the deal. If money doesn’t exchange hands, many times the seller doesn’t feel that they consummated a sale.


I find a house that has a small balance on the first. Lets say the house is worth a $100,000; the balance on the first mortgage is $30,000.

If I wanted to buy this house for lets say $80,000, I could ask the seller to carry back $15,000 and go to a hard money lender to borrow 65%
of AMV (appraised market value) of which is $65,000 and the seller carrying $15,000 in second position, would ad up to $80,000. It would also give your seller $35,000 new cash, and $125.00 income on the $15,000 loan that they carried at 10% interest only, for 5 years.

(5) HARD MONEY: Hard money, is an equity loan made at approximately 65% LTV, based on the equity of the property only. Credit is not a consideration.

(6) HARD MONEY/SELLER CARRY BACK: Again, You can have the seller carry back a second and refinance the first, giving the seller some money. You can do variations of this system.

(7) SUB PRIME FINANCING: Many National lenders will provide financing at 70% with poor credit and won’t verify money down.

(8) SUB PRIME/ SELLER CARRY BACK: Again this combination can provide money to the seller, rather than ask them to carry the whole thing. Also there are local independent portfolio lenders that will lend as well as mortgage co’s and I always recommend seeking them out. National one’s would be Associates Finance, American General, Beneficial etc.

(9) CREAT YOUR OWN MORTGAGE: In our workshop, Terry Vaughan covers this, and shows you how to discount it and market it.

Ed Garcia