Posted by Michelle on April 20, 2006 at 13:54:11:
Thank you Ed. How about partnership with contractor paying him 10-15% interest for carrying the repairs and labor until house sells. For Sale Ad running next week. Currently owner wants 60K and is carrying 123K for 3mo at no interest while I rehab. He will not borrow cz owns property. Also Hard Money Lender will work but the ones I’ve looked at will lose me 2wks by the time it’s inspected, appraised and the funds are available.
Need investment money/advice for rehab in AZ - Posted by Michelle
Posted by Michelle on April 19, 2006 at 20:33:09:
Have contract on house at 70% of ARV without additions figured in. Owner owns home would like 60K now (will flex on that), willing to wait several months until close to get rest. Owner wants simultaneous close so that my purchase price is not disclosed (rules out hard money lender). Lining up contractors for bids on rehab - rough estimate 20K. I have ruined credit/current bankruptcy due to 3 rather serious car accicents in 2yr so am just getting back on my feet.
He owes back taxes which he will pay at closing. Rehab must finish what he has started: he gutted the kitchen, added on great room, sunken room area and master bedroom all of which only have walls with electrical and plumbing piped in. Had contractor/electrician and plumber so meets city code. New roof, A/C unit and water heater. Rest of house and yard/pool only needs cosmetics and new carpet.
Re: Need investment money/advice for rehab in AZ - Posted by Ed Garcia
Posted by Ed Garcia on April 20, 2006 at 10:15:13:
Michelle,
When you say, ?Owner wants simultaneous close so that my purchase price is not disclosed (rules out hard money lender).? Not so, a ?Hard Money Lender? can do none conforming moves if they understand the deal and it has their required equity.
Because of your credit criteria, a Hard Money Lender is your best candidate as a lender.
Michelle here is 9 ways to do a deal with bad credit and no money.
(1) PARTNERHIP: Find a 50/50 partner. It don’t have to be 50/50, it can be what ever you can negotiate. The partner don’t even have to have money, just good credit.
(2) FLIP: the best way to flip is to find a potential buyer first and then find a property. You can do this by running an ad on a property to see what kind of action you get. Once you have a potential qualified buyer, you’d be surprised how easy it is to find them a house.
(3) LEASE OPTION: Many times you can buy and sell with a lease option. We call this a “Sandwich Lease Option”. Jim, I’m not going to go into any great detail, you can find this information all over this forum.
(4) SELLER CARRY BACK: This is one of, if not my favorite ways to buy. Now the best way to utilize this system is to do a second seller carry back in order to give the seller some cash in the deal. If money doesn’t exchange hands, many times the seller doesn’t feel that they consummated a sale.
Example:
I find a house that has a small balance on the first. Lets say the house is worth a $100,000; the balance on the first mortgage is $30,000.
If I wanted to buy this house for lets say $80,000, I could ask the seller to carry back $15,000 and go to a hard money lender to borrow 65% of AMV (appraised market value) of which is $65,000 and the seller carrying $15,000 in second position, would ad up to $80,000. It would also give your seller $35,000 new cash, and $125.00 income on the $15,000 loan that they carried at 10% interest only, for 5 years.
(5) HARD MONEY: Hard money, is an equity loan made at approximately 65% LTV, based on the equity of the property only. Credit is not a consideration.
(6) HARD MONEY/SELLER CARRY BACK: Again, You can have the seller carry back a second and refinance the first, giving the seller some money. You can do variations of this system.
(7) SUB PRIME FINANCING: Many National lenders will provide financing at 70% with poor credit and won’t verify money down.
(8) SUB PRIME/ SELLER CARRY BACK: Again this combination can provide money to the seller, rather than ask them to carry the whole thing. Also there are local independent portfolio lenders that will lend as well as mortgage co’s and I always recommend seeking them out. National one’s would be Associates Finance, American General, Beneficial etc.
(9) CREAT YOUR OWN MORTGAGE: In our work shop, Terry Vaughan covers this, and shows you how to discount it and market it.
Michelle, I hope this post is helpful to you and gives you some food for thought.
Ed Garcia