Posted by Paul Macdonald on December 10, 1998 at 15:13:38:
I was going to answer that using a Line of Credit against your primary residence was your best bet for raising cash (it is) but I like this one a heck of alot better for cash flow.
Raise enough cash to do your renovations with the equity line and get seller to L/O to you. Great combination.
Just be sure to get the equity line prior to setting up the lease option.
Good Luck,
Paul Macdonald
Financing a second investment property - Posted by Steve Mirack
Posted by Steve Mirack on December 10, 1998 at 10:01:30:
I live in a historic district and have restored 2 homes, our primary residence and a rental property. The first was bought in 95 for 139K and is currently valued at over 210K. I had to invest approx. 15K and alot of sweat equity. The second property was purchased in 4/98 for 100K and is currently valued at over 160K. We invested 20K and it was my full time job to renovate it. At the time of purchase, we had a few bucks, so we put 20% down + closing costs. Our note is for 15 years at 7% which comes out to 1K/month(includes escrow)and is currently rented for $1200/month.
Our dilemma. We put a contract on another property for 118K. It appraises for over 138K. I would like to work on this property full time and flip it. We have alot of equity, but no cash. I strongly feel the property will appraise at over 190K when finished. (the neighbors house is identical, but much nicer, and was purchased for over 200k a few years ago) My wife works full time.
Any recommendations?
Thanks, Steve
Re: Financing a second investment property - Posted by Carl (IL)
Posted by Carl (IL) on December 10, 1998 at 14:39:01:
You could get a 2nd ‘line of credit’ on your primary residence up to 100%ltv, ($71,000). You could then use this money as a down payment plus fixup costs to purchase the property you have on contract. Once you sell or refinace, you can pay your line of credit back and do it again. Depending on the sellers equity position, maybe they could sell it to you on contract or carry a 1st for a couple of years with part of your line of credit as down.
-Good luck
Re: Financing a second investment property - Posted by Cesar
Posted by Cesar on December 10, 1998 at 12:52:24:
One Word:
LEASE OPTION!
If he won’t go for it, offer him a little bit more on the sale price, say $123,000, If he’ll give you an ASSIGNABLE lease option for two years w/ no payments for six months. After it’s fixed up, take out a 70% loan on $190K, Pay them, and walk away with 8K in your pocket and probably a positive cash flow. Or just sell it outright and take the rest of your profit of 65K and go to Hawaii.