lender scared MLS says "rehab needed" - Posted by rich

Posted by Rob on September 16, 2004 at 12:41:41:

This is true. I have also had an agent change the listing for me in order to get the loan. This is a good idea!

lender scared MLS says “rehab needed” - Posted by rich

Posted by rich on September 15, 2004 at 06:36:00:

I got out of attorney review last tuesday on a 3 family that I am looking to covert to condos. I met with my mortgage broker to discuss rates and was offered a killer rate of around 3.5 on a 6 month fixed libor based loan. I am only keeping the property maybe a year so this would be a great deal. I order up the apprasial( the appraiser is a buddy of mine) and he pulls the MLS listing and in the mls listing it says “AS IS - REHAB NEEDED.” He calls me up and tells me that this will scare away most of the traditional lenders as they will start asking what needs to be replaced. It could use 2 baths, a new facade and 3 heating and cooling units. I have my repairs for the house pegged at around 60K if we do most of the work myself but it is my fear that these lenders are going to ask me to escrow the cost for a contractor to do these fixes which could be well over $125K. Actually the lender told me once the repair list gets large they will not want to do the loan

I have a detailed cost accounting and there is good money to be made by the project. If I have to I will go and get a constuction loan but does anyone know of a traditional lender that will not be freaked by the fact that the house needs some repairs?

The contract price on the house is 605K and other houses in this size in my area sell for $750-800K. I would have thought this was a good thing but both the lender and the appraiser are telling me this is a red flag that the place needs tons of work and rather then a sign that Rich got a good deal.

Re: lender scared MLS says - Posted by Sean

Posted by Sean on September 16, 2004 at 12:04:50:

Ask the listing agent to change the listing before you submit the property for the mortgage and/or appraisal. If you come to the table to buy the deal, the listing agent shouldn’t have a problem changing the MLS listing NOTES field.

Re: lender scared MLS says - Posted by Rob

Posted by Rob on September 16, 2004 at 09:43:23:

Most hard money lenders will lend between 65 and 75 % of the after rehab value. They will do 100% of the purchase price and 100% of the rehab price as long as the total loan is 65 to 75% of the after rehab value. In some cases you don’t have to start making payments until after a year.

If the seller is willing, you could enter into a land contract and pay the sellers comission as a down payment then refinance to pull the equity out to make your rehab. Ask the seller for a delay in payments 1 to 2 months. There are lenders out here who will refinance a land contract with zero to 6 months seasoning. Or if the loan you are currently considering does not have any seasoning, you can refinance it to pull some equity out to complete your rehab.

I’m assuming the property is vacant. If not you can close on the 3rd of the month to recieve the prorated rents at closing.