Posted by pboone on March 20, 2000 at 15:38:31:
It really would depend on your intentions and the relationship you have with the bank. Most will want you to place some cash in the deal. If you have other property they sometimes will allow you to pledge that as collateral. Your caution is well deserved on this deal, anyone who does nothing after getting city violations is usually a poor person to make deals.
Pat
save a newbie from being BURNED!!! - Posted by christopher
Posted by christopher on March 20, 2000 at 14:02:37:
I was driving through a little town where i live and saw a house that was in pretty poor shape. the windows were broken out, the paint was quite aged, and no one occupied the house. I came to discover that the gentleman who owned the property had been to court on many occasion due to the nature of the property. I found out who the owner is and approached him to see if i could land a good deal. If i could get the property for 10,000 bucks, i could renovate and sell for more than the total investment, rent it (turn it into a 2 unit), or lease option it.
My concern is this…if i come up with the cash to buy it (or get the owner to hold the mortgage), what avenue do i have to get financing to fix up the place? Isn’t true that the bank will not finance a property for say, $30,000 when the property, in fact, is only worth $10,000 (due to its poor condition)?
in which direction should i go?
Thank you in advance!
Re: save a newbie from being BURNED!!! - Posted by Bill (oh)
Posted by Bill (oh) on March 21, 2000 at 21:55:10:
Chris, there are banks that will loan based on aftermarket value. One that I deal with here in Ohio will lend 80% of after rehab value on Multi and single families, and 75% for commercial rehabs. I’ve done no money down deals where I bought the property for much less than fifty percent, and borrowed 100% of my purchase price, closing costs, repair costs and profit. So, while the rehab is progressing, I have my profit and I’m out finding other deals. (The bank gives a 90 day, interest only note due and then turns the note to a regular loan). Good luck!