Financing an REO - Posted by Bruce Pendleton

Real Estate Investing
1

Posted by PBoone on December 15, 1999 at 06:48:03:

Bruce,
Private mortgage investors aka “Hard Money Lenders” lend based on the equity. In this case you would be @ 73% FMV. If you have some cash to put into the deal like 10% you will probably be able to get the money for this deal.
Look in the sunday paper under “money to lend” and make the calls to discuss the transaction.
Pat

2

Financing an REO - Posted by Bruce Pendleton

Posted by Bruce Pendleton on December 14, 1999 at 22:34:46:

I am currently doing the numbers on a real nice Reo the bank wants 126000 for, and I was going to offer 110,249.
I’m a first timer at this creative financing and the bank will only do an 80% loan. I have found another bank that will go to 90%.

The property is a two flat with a FMV of somewhere between
150,000 to 165,000. Even at a 90% loan one months rent on just one of the two apartments will pay the note payment.
Where can I find a private mortgage investor to loan me more than 90%, without the $7000.00 in pts and closing costs a bank will charge?

I’m a Licensed Plumber and can do the minor upgrades the property will require to rent at fair market. I just want to keep as much of my own money out as I can for costs after closing. Are there private investors that will make a 100% loan on a property you plan to hold on to for rental?
This deal appears to have alot of equity no matter how you
crunch the numbers. I just don’t have the contacts to check this out properly. Thanks for any help you can provide, this really is a great service.

Bruce

3

Re: Financing an REO - Posted by Paul Macdonald

Posted by Paul Macdonald on December 18, 1999 at 09:16:27:

Firstly: No lender is going to lend you the money without closing costs. Period.

Secondly: No lender is going to lend you 100% on an investment unit. Period.

HOWEVER!!!

If they won?t let you in the front door go in the back.

  1. Buy the house. It sounds like a great deal.
  2. Pay the down payment (preferably with a loan that can be placed against the property as a small second and your closing costs ? a very cheap entry fee ? and don?t worry about the interest rate; just make sure there is no prepayment penalty.
  3. Renovate ? use sub-contractors so that you have a paper trail of hard costs.
  4. Go to any Fannie/Freddie lender. They will lend up to 80% of APPRAISED value with no seasoning on investor units.

End result? You get your money back in your pocket and an almost no money down deal.