My Friend is Buying a House - Posted by Sonjia

Real Estate Investing
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Posted by Sonjia on July 06, 2003 at 10:45:38:

Thanks, Ed. :slight_smile:

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My Friend is Buying a House - Posted by Sonjia

Posted by Sonjia on July 06, 2003 at 09:59:37:

I have a friend that was recently pre-approved for close to $150,000 to buy a house. Since I’ve been reading/studying RE investment, I thought that maybe I could find a house and flip it to him. Once I confirm that his lender doesn’t have any seasoning issues, is there anything else I should consider? Would the lender care how he acquires the house?

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Re: My Friend is Buying a House - Posted by michaela-ATL

Posted by michaela-ATL on July 06, 2003 at 13:48:46:

Sonja,

another thing to keep in mind is: How good a friend is this? Are you willing to lose the friendship? A lot of times, when there’s money involved it changes the dynamic of a friendship. How would your friend feel about you making profit on this? Would he hold a grudge? Would he say:‘hey, you’re my friend, how come you’re charging me more than what you’re paying?’. Will he walk from the deal when he finds out, that you’re making profit, even though he may love the house? Doing business with friends can be a two-edged sword.

Michaela

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Re: Anything else? Yes, - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on July 06, 2003 at 10:18:02:

one thing that comes to mind is that pre-approved and pre-qualified are not necessarily the same thing.

Pre-approved means the numbers work.

Pre-qualified means that the buyer will work, along with the numbers. When making a pre-approval the lenders usually do not do the credit check until the deal is on the table. Then is when surprises can happen.

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Re: Anything else? Yes, - Posted by Sonjia

Posted by Sonjia on July 06, 2003 at 10:31:17:

Ahhh. I see. I’m going by what he is telling me (I think he believes he’s already gotten the bank approval), but perhaps that’s not the case. I’ll confirm.

I guess it can be pretty risky to do a deal this way. I’ve heard of instances where a person gets approved in advance by a lender and then is able to shop for a house (all they’d need is a letter from the lender?). Does this still happen?

Obviously I have a big newbie stamp on my forehead. I’m looking for my first deal. Thanks for your response. :slight_smile:

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Re: Anything else? Yes, - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on July 06, 2003 at 10:42:15:

Pre approval is a very good place to start, just keep in mind that most lenders do not like to use credit information that is more than 30 days old. Things can change, or things may get overlooked. Just stay alert, and go foreward. Everything will work out.