Posted by kevin on January 11, 2001 at 09:57:10:
hi amy i dont know what kinda credit you have but there are 80/20 programs available to where you can purchase an owner occupied home with zero down and remember when making an offer always write in that the seller contributes up to 6% for closing costs this gives you some lee way hope this helps
Real Estate Beginner - Posted by Amy Rose
Posted by Amy Rose on January 11, 2001 at 04:22:33:
Any advise to give on how to begin investing in rental properties as a new, single, female, 24 year-old homeowner? I recently built my first home through FHA, but I needed a 3% down payment and closing costs. Now that I have a mortgage and other bills, I can’t seem to come up with that kind of cash again for closing costs and down payments. And now that I am not a first time homebuyer anymore, I don’t see many lower cost financing options available to me. Any suggestions?
Thank you.
Amy
Re: Real Estate Beginner - Posted by Ed Garcia
Posted by Ed Garcia on January 11, 2001 at 10:04:22:
Amy,
I just finished answering a post that I thought might be interesting for newbies who are just starting out and have poor credit.
Amy,
In my workshop, I teach that there are at least 9 different ways you can do a deal with poor or bad credit.
Now before I give them to you, I want you to know that I’m really supportive of learning deal structuring. The first thing you need to do is, “investigate your deal” to know what I call (where the bodies lie) another words what is the seller’s main objectives or motivation. That allows you to have an idea of what approaches are going to be compatible with the sellers needs, allowing you to do the deal.
Here are the 9 ways that I’ve mentioned.
(1) PARTNERHIP: Find a 50/50 partner. It don’t have to be 50/50, it can be what ever you can negotiate.
(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 workshop, Terry Vaughan covers this, and shows you how to discount it and market it.
(10) CREDIT: Amy, I think you have good credit, because you financed building your home, so you can finance a deal based on your credit and the structuring of the deal. You saw the structuring of a deal in (3) Seller carry back and using hard money. Also you can finance NOO with 10% down, and I have some programs that require the seller to only put down 5% with a seller carrying back the difference. Amy, having good credit provides you many different ways of structuring a deal.
Amy, I wish you much success and hope this post is helpful to you, and will encourage you to stay with it. The only way you won’t be successful in this business, is when you stop trying.
Ed Garcia