Posted by Chris Reuman on October 04, 2002 at 13:58:39:
As one gentleman said earlier, first of all, lock it up with a purchase and sale contract or option to buy. Then you can at least sell the contract to someone else that has money. You may want to start at your local Landlord’s Association Chapter. I’m sure there are people that would be interested in the contract. As for the renovation, renovate one unit at a time and try to get a person in the unit at a lower rent while you are still finishing the renovation ie. Move in this week, pay $400 instead of $500 and I have the carpet in next week and you paint the walls. Also, you can renovate in stages: paint the floors, rent $400, in six months carpet, rent goes to $450. The key is to get that cashflow going as quickly as possible.
Posted by Vickie on September 06, 2002 at 24:43:45:
I have minimal experience in real estate investing, mainly residential rehab, and tonight I stumbled upon a small three-unit apartment building that the owner inherited and neglected. The property is now overgrown, shabby and vacant and he wants rid of it. He’s asking $16K for it, but told me tonight that he’d take $8,500., possibly owner financed. I need to do a thorough inspection, but other than replacing the old plumbing, it appears structurally sound - roof only two years old. The local college has become a university and rental rates are going up. With that and the unbelievable price, I just can’t let this go. I can work out the financing with the owner, but need around $8,000 to do the rehab work. With poor credit, I’m unsure of how to go about the financing. I have another small lot valued at $10,000 with a clear deed…are vacant lots considered an asset in a loan proposal?..will the property be it’s own collateral?..Should I rehab as a rental property or to resell?..After the inspection of building and bookkeeping, discussion of terms with owner, what should be my next step? I’m embarrassed over the small amounts of money I’m discussing and apologize for my inexperience, but would greatly appreciate any advice given me.
You may want to try this company. I located their inforamtion but have not tried them out yet. From my understanding they will loan you the money for the purchase, providing you do not live in the property. Then they will provide you X amount to rehab the property, they will only reimburse you for what you have put in. This way you could use the same dollar amount over and over until you were close enough to refi. Then you need to refi with in 1 yr.
www. rehabfunding.com
Also, check with the local town/village or city boards. Were I live there are low interest loans and grants provided by them to rehab properties in the area. Especially for nich housing that is in demand such as College housing in a college town.
Re: Embarrassed, but here goes - Posted by ray@lcorn
Posted by ray@lcorn on September 07, 2002 at 19:56:10:
Vickie,
My first choice would be to sell the lot. That converts a non-producing asset into one with income. With poor credit you will be better off using cash to get the building up and producing than trying to qualify for a loan. Once the rehab is complete and the building is occupied you will stand a better chance of getting a permanent loan.
My second choice would be to find either a hard money lender or private investor to lend you the cash needed (tip: be sure to plan for overruns) for the rehab, secured by either the lot or the lot and the building. In this scenario the seller will have to agree to subordinate his lien. The downside of this is that it will cost you money while you are working. If the interest must be paid monthly, then be sure you have the cash reserves to meet that payment until the property cash flows.
What will the building be worth after repairs and occupied?