Heres a question for the GURUs - Posted by DT

Posted by DT on May 25, 2000 at 01:46:46:

Thanks Roy and you are correct penalty is not a choice word nor do I think the seller will appreciate it…lol I am gonna look into that and have recieved your email…I am definately interested in more info on it…

Thanks Again
DT

Heres a question for the GURUs - Posted by DT

Posted by DT on May 24, 2000 at 06:49:34:

It is becoming more and more harder to find banks to finance buyers from property flippers who have not held title for a year…I figured a way to not have my name show up on title and sell from the original owners name rather than my own in an attempt to get around this obstical… EXAMPLE

I want to flip a property that I can buy for 15,000 and resell for 45,000 in under 60 days but the banks wont finance my buyer because on title it will show I just purchased it for 15,000 a week prior. The lenders want to know why this property all of a sudden is worth 30,000 more because I am selling it (this is due to the large amount of Mortgage Fraud by way of flipping) So getting back to the example the only way I see around it is by creating a option agreement or purchase agreement giving you a 1 year option to purchase the property for 15,000 with a penalty if the seller sells it to anyone else during that 1 year contract period…The penalty being anything in excess of the 15,000 you have the contract on the property for…In other words you let the property be sold to your buyer from the seller and get paid a penalty of all proceeds in excess of the 15,000 this way the seller gets his 15,000 and you get the difference…The reason for doing this is so that when Title is pulled by the lender the seller is the last recorded owner and has held title for over 1 year so getting the buyer financed doesnt pop the 1 year title seasoning red flag… I hope I explained this ok and its not too confusing…Any input would be appreciated as I have yet to use this method but am working on a package of 4 properties and want to flip them this way… For all other Flippers out there FHA has a nice program for flipping…Under 600 Fico 97% financing with seller concessions toward closing costs and gift letters allowed for Down Payment…One of the few programs available in NY for unseasoned title flips…

Re: There is financing still out there for rehabbers - Posted by Lori Samson

Posted by Lori Samson on May 24, 2000 at 13:47:47:

I am in a rehab that I am refiancing. It has become more difficult to get refinanced now but I have Bank of America/Nations Bank that will refiance in your Corp. name for 90% of appraised for 25 year fixed at about 9.85% and it doesn’t have to be a year seasoned! I am going a different route and I am refinancing at 80% with no cash out. I borrowed private money and money for repairs. I am going to add the money I wanted to pull out of the house on to the private loan so I get my money and the private loan get paid off and I techniquely didn’t have a cash out loan. There are loans out there to be gotten but you do have to shop for them. I will not likely be doing a lot of rehabs with the interest rates the way they are and I’ll stick to lease optioning and selling on lease option. It is a Seller’s market in most of the country right now. Lori

I’m still looking. - Posted by Bud Branstetter

Posted by Bud Branstetter on May 24, 2000 at 11:58:51:

There are houses that I can find that could be flipped as is for 20-30K profit.But I haven’t found one in that price range that doesn’t need a world of rehab, which is why banks won’t lend on it. I’m still learning and searching. Maybe that appointment I have Saturday will let me buy for 15K so I can flip it for 45K and the next investor can make 10K. My guess is that we will end up nearer 30K on an ARV of 65K and 10K fixup.

Are you going to give them 15K option consideration or are they going to be accomodating and wait until the final resell.

Re: Heres a question for the GURUs - Posted by Steve-Atl

Posted by Steve-Atl on May 24, 2000 at 08:27:18:

Consider doing an end run around all that conventional bank stuff.

Instead sell the property with owner financing where YOU create the notes. Structure them so that you can sell one note at closing to pay the seller. If you do it right, you can get most of your profit in cash at closing and the rest in a monthly cash flow.

Its more complicated than telling the buyer to go get a loan from a conventional lender, but you can avoid many of the hassles if you arrange the financing yourself. Also, I’ve found its much easier to find buyers by advertising the property as NO BANKS REQUIRED Owner Financing.

I am curious (PACTrust)…Click on the ad. - Posted by soapymac

Posted by soapymac on May 24, 2000 at 08:11:58:

DT,

I am not 100% sure (because I have not done one yet,) but I believe the situation you describe is one that is made to order for a PACTrust. You may want to investigate this avenue. Think about it. If a PACTrust DOES do the job, it may be much nicer than the word “penalty.” That word has a negative context attached to it in the outside world.

Cordially,

Roy MacLean
"soapymac"

Re: I’m still looking. - Posted by DT

Posted by DT on May 25, 2000 at 01:57:57:

The 15,000 scenerio was an example…Its actually 4 properties I can grab for 100,000 (25 apiece package only) The seller owns them free and clear and has agreed to 10,000 down on an option for 1 year…During that year I can sell them off one by one with proceeds being held in escrow until all properties are sold at which time the escrow of proceeds will be split up…He will get his 90,000 balance and I will recieve the rest…But the key thing here is to sell these properties out of his name so I can have more availability to financing for my buyers…Since title would show the same owner/seller for 20 years…Its just a loop hole to get around the one year holding title before you could resell…I know I can sell it if I owned it and privately held the mortgage possibly even have more availabilty on the sale of the note if I seasoned it for a few months but I am just looking to cash out at the closing and move on…