If you really have a hard money lender who will lend $150K, get the hard money loan and pay off the existing loan. Few hard money lenders would consider a second and I doubt the existing loan would consider subordinating (assuming it’s from a bank and not from, say, Uncle Johnny). And if you can get $150K you don’t need to keep the existing loan anyway. Sure, it’s at a lower rate, but you have no cash, so you kind of have to get what you can take.
Posted by Brian T on February 24, 2001 at 20:47:10:
Suppose I get a house and I take title subject to. The house comps out at about $200,000.00 and the owe $100,000.00 on the first. The seller will sell to me if I can provide him with $$20,000.00 cash.
I have $0.00 cash and want to do this deal!
Now I know a hard money lender will loan up to 75% of the market value so, if comps are $200,000.00 and the first is $100,000.00 and 75% of $200,000.00 is $150,000.00 does that mean that I would be able to obtain a hard money 2nd on the property for $50,000.00 if I needed it?
Posted by TRandle on February 24, 2001 at 23:03:30:
Brian,
I’m no expert, but I’ve used hard money a few times and have checked several sources. Most folks in that arena typically will only loan 65% of the ARV and don’t do seconds.
I’m also suspicious as to why a seller would give you their 200k house for 120k? Either it needs a ton of repairs, your comps are way out of whack, or both. What’s the missing piece here?
Have the seller refinance to pull cash out and then take the property subject to. I’d also be interested in more details. Thanks…