Selling inner city rehab properties - Posted by Mike

import · April 10, 2000, 9:22pm

Posted by Bill K. - FL on April 11, 2000 at 15:00:50:

Check with the city. They may have some special loan programs targeting your area. FHA just came out with a program for cops, teachers, etc. for 1% down. Find a good mortgage broker if you haven’t already.

import · April 10, 2000, 9:22pm

Posted by Mike on April 10, 2000 at 21:22:06:

Hello.

I’ve done several rehab jobs on properties in the inner city and have never had a problem getting buyers to respond to my owner financing, Seller will help, etc. type ads. The problem, of course, is getting them financing. I always seem to get the deal done, but the most I’ve been able to cash out with is 80%LTV. I know that vast majority of rehabbers sell their properties with some type of down payment assistance or carryback a second, but I’d like to know if anyone has any success getting full price. This may mean going FHA consistently or perhaps listing the property with a realtor and getting a conventional mortgage. I know this would probably take longer, but is likely worth the effort if the investor can get all cash on the back end.

Any thoughts are appreciated.

Thanks.

import · April 13, 2000, 2:09am

Re: Selling inner city rehab properties - Posted by JPiper

Posted by JPiper on April 13, 2000 at 02:09:39:

There are a variety of programs that would typically be useful in the inner city areas. State housing bond type programs are sometimes available. Some areas offer substantial subsidies for low income borrowers. One program I’ve seen offer a 20% grant which is forgivable over 10 years or so.

One of the problems is that the borrower needs to have good credit. These days, with the proliferation of programs, sometimes the good credit borrowers aren’t looking for inner city properties.

A further problem stems from the first problem. Because the good credit borrower is more limited in the inner city areas, your holding period is going to increase, perhaps significantly, while you’re looking for the guy with good credit who wants the inner city. While you may end up cashing out…your holding costs are going to rise significantly, not to mention the risk of vandalism, and realtor costs.

I’m not trying to discourage you…but frankly there is no easy answer. I think I do better offering to help with financing, not using a realtor, and cutting my holding costs down. By the way, you should be able to find buyers who can qualify for better than an 80% loan.

JPiper