Financing an REO - Posted by Bruce Pendleton

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

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.

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.


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.


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.