Re: Financing second property, how to qualify - Posted by dell-ohio
Posted by dell-ohio on July 11, 2003 at 21:51:20:
- Ask the seller to finance the entire project
- Borrow what you can from the bank and ask the seller to carry the down payment. Usually 80/20.
- Borrow 80% from bank, seller carry 10%, you put 10% off your money in the project.
- Purchase Subject 2
I would look for a local community bank that loans on commercial properties. In our area the banks will loan 80% of purchase price or appraised value, whichever is LESS.
You could interview a few banks/loan officers and explain to them what you want to do. Ask them if they make these kinds of loans and what their requirements would be. Ask them if they take equity in other property as a down payment, do they accept the owner carrying the down payment.
Some banks will take equity in other properties for the down payment. (this is how we buy all our properties if the owner does not carry the down).
Some banks will allow the entire down payment to be carried by the seller. Some banks require the purchaser to use 10% of his own money and allow the seller to carry the other 10% down.
If you find a bank that allows owner carry back of down payment you are only limited by your ability to find a seller willing to carry 20%.(shouldnt be too difficult)
If the bank requires you to contribute only 10% and they are willing to use equity in another property you could purchase a 400,000 property. If I understand you correctly.
Your house appraised for 13,000 more than what you paid for it. You put 6,500 down. 13,000+6,500 gives you equity of 19,500 or say 20,000. Say you have 20,000 equity, the owner is allowed to carry 20,000 thus you have 40,000 down, enough to purchase a 200,000 piece of property.