Posted by Patrick S. Lawson on September 29, 2005 at 12:56:22:
What kind of repairs are needed?
Financing Solutions for 2 deals - Posted by Mike B
Posted by Mike B on September 28, 2005 at 12:29:05:
I have my first 2 deals I’m working on and was hoping to get a solution to getting them financed.
It’s a package deal.
Property 1:
Duplex: $67,000: Fully rented $900/month combined good tenants
Will appraise for $80,000 - $85,000
Property 2:
Single: $60,000: Rented $636/month part of rent is section 8 also a good tenant
Will appraise for no less than $70,000 but I’m thinking closer to $75,000
They need just a little work, basic cosmetics so I was hoping to pull out $5,000/property at the time of close.
My partner and I have been pre-qualed for 95% LTV 80/20 arm. When I explained to the broker I needed to pull 5k out for each house, she said the only way would to increase the selling price and to work out a deal with the seller and have him cut me a check at close.
Obviously that doesn’t work out for the seller because he would have to pay the taxes. The seller has been helpful and gave me a broker he’s worked with in the past to possibly find a solution. She hasn’t come back with anything just yet so I was hoping someone else had a better solution to getting these properties financed.
Combined these properties will appraise for no less than $150,000 but probably closer to $160,000. I’m able to pick them up for $127,000. They should have a positive cash flow of $400/month combined.
The numbers seem to work even by pulling 5k/house. Are there any better solutions to getting these financed? I would hate to lose these deals because of not being able to get them financed.
Thanks in advance
Re: Financing Solutions for 2 deals - Posted by John B. Corey Jr.
Posted by John B. Corey Jr. on September 28, 2005 at 20:31:22:
The solution suggested by the broker (side deal with the seller) is mortgage fraud. Criminal issue so jail time if caught and proven guilty. Posting to a public forum is one way to leave a trail. A litmus test is if declaring what you are trying to do to the loan underwriter changes the loan decision then you know you would be over the fraud line. Full disclosure of where the cash is coming from and where it is going is assumed by the underwriter.
Are you trying to fund the repairs with the $5K per property? Look at a credit from the seller for repairs. Up to 6% and disclosed on the HUD.
John Corey
Chelsea Private Equity LLC
Re: Financing Solutions for 2 deals - Posted by ZACH
Posted by ZACH on September 28, 2005 at 13:59:30:
What State is this? what are the fico scores? and what is the estimated ARV?
Re: Financing Solutions for 2 deals - Posted by Mike B
Posted by Mike B on September 28, 2005 at 20:57:57:
Thanks John!
Yes, I’m trying to fund the repairs with 5k/property. I certainly wasn’t going to go along with the brokers suggestion.
I guess another question would be, is it possible to pull 5k/property for repairs with these deals?
Re: Financing Solutions for 2 deals - Posted by Mike B
Posted by Mike B on September 28, 2005 at 14:12:28:
Florida,
Fico mid score is 620
ARV Duplex = est. 90k
single = est. 80k
Thanks