Posted by DB-WI on January 28, 2000 at 12:28:47:
I have an accepted offer to purchase a REO 2br duplex for $30K, seller to provide repair allowance of $5K. The property is non-conforming due to lot size code requirements, but is typical for the area. The property also has on the lot a small cottage which is owned by someone else, the cottage is also non-conforming. What I had intended to do was essentially use the repair allowance toward the down payment(10% down) and closing cost, and have cash left to make some necessary repairs. Comps are good, it should appraise no problem. I’m really having trouble finding a lender to carry a 90%LTV loan, it seems the combination of a non-conforming property, in addition to needing a little creativity in where the down payment comes from (non-seasoned)is asking too much. One broker said he said something could be done if the repair allowance was handled “informally”, but this isn’t possible, because of who the seller is(REO). I am in Wisconsin, if it matters, and intend to keep it as an income property (total rents of $800/mo!).
Just wanted to thank those who have helped me in the past year, last year this time I owned 0 properties, and I now have 7 rental units, fully rented, with rents raised to market and only lost 1 months rent in the process. What has worked for me in the past is to find motivated sellers to carry a 15-20% second mortgage, for which i have no problem finding lenders that only want 5% down from me. As it works out, pro-rated rents, security deposits, and tax and water prorations equal or exceed 5%. A roundabout way to buy 0 down with pretty conservative lenders, and sellers seem more open to a small second rather than a l/o, land contract, etc.