Use “Soft” Money lender then Refi? - Posted by Brian,WI
Posted by Brian,WI on October 09, 2003 at 18:14:44:
I have a 2/2 duplex under contract for $75,000. Average duplex sales is $125,000 in my community with more similar comps of about $110,000. This would be good No Money Down deal, if banks loan on comps not on the sales price right?
This is still a pretty good deal although I want to clean it up some with about $6,000 in each unit. Rents will then be about $525-$550 each and there are separate utilites.
I’m going for conventional financing because the seller wouldn’t take my lower all cash (my own) offer. Here’s the thing and correct me if I’m wrong…Because the purchase price is just $75,000 there is a REAL GOOD chance the appraisal will come in at about $75,000 correct? Or do you think that with the ligitimate comps I may get more? Either way this lender wants 80% LTV and then will only give 80% on the $75,000 or $60,000, if that’s how the appraisal comes in. So much for No Money Down.
Now I have a “Soft” money lender(soft because the terms are very good-9.5% and 2 points), where I can get the $75,000 and some of the fix up costs. I guess I should go this route correct? By doing so I’ll then be able to do the fix up and go back to my conventional lender and should then be able to pull just about everything back out and pay off my “soft” money lender because at that time the appraisal should come in closer to the comps of $110,000 don’t you think? This would then be closer to a No Money Down deal.
Is my thought process correct on this?