We FINALLY got one!!! (long) - Posted by Kathie E.
Posted by Kathie E. on June 06, 2000 at 19:18:07:
Hope someone out there remembers me…it’s been awhile!
At last posting, my husband and I were consulting with some rather unsavory characters who were trying to sell us some single-family homes for 80% of FMV and taking back a 2nd mortgage for us as the down-payment and then “forgiving” the 2nd mortgage in 30 days. We ran from them swiftly after advice from some in this forum as well as our attorney.
We then went back to the drawing board…meeting with mortgage brokers and banks to find a way to use our current home equity to begin purchasing rehabs or foreclosures to rent or flip. Every mortgage broker told us the same thing: We couldn’t obtain an equity line of credit on our home for the amount that we needed and we would have to refi our home and pull the money out of the property that way (we owe appr. 25% of the FMV of our home after 11 years). We closed on such a loan and left feeling defeated…this was NOT what we wanted to do! We didn’t even have a house in mind to buy and we were facing a $900 increase in our monthly payment for money that we were borrowing and not able to use right away…not to mention that we had no rent or other income to make up the difference in our payment amount. We went straight to our own bank that we’ve had an account with for almost 10 years (having been turned down a year ago, we felt we had to try one more time!) and after a 20-minute phone conversation with someone in the bank’s home office (placed by the local bank’s loan officer on our behalf due to our 3-day clause on the loan we closed on that day), we were guaranteed an equity line of credit for 80% of our home’s value and had a check book for that line in 7 days. Needless to say, we cancelled that day’s BAD loan deal right after we left our bank.
We went to that week’s sheriff’s RE auction and watched the 11 houses (out of that day’s 75) that we were interested in either get bought back by the mortgage company or by people who were willing to bid higher than the limit we set on each property. We knew that it took other people sometimes a year or more to get their first one at the auction, so we assumed we had awhile before getting started. Meanwhile, it just felt great to know that the money was THERE if we needed it! Our bank officer set up a system for us to call her on Wednesdays with the amounts of the cashier’s checks that we needed for that Friday’s sale and they were waiting for me at 9:00 a.m. sharp with the checks on Friday morning (waving the normal $5 per check fee, I might add.) By the following Wednesday (week #2), we had done driveby’s and title searches on 23 properties that we were willing to bid on for that Friday’s sale. (They now know me by name at the courthouse records departments…) I picked up the 5 checks totalling $46,500 that we needed in any combination to by any of the 23 houses we were to bid on and met my husband at the sale. It was our daughter’s 5th birthday. A home that was TAX appraised at $45,900 in a really nice, well-kept and low-crime neighborhood, had a $30,000 mortgage on it taken in '98 and in my research, I’d found that these owners had skipped town and this was their 4th and final property going on the block. I told my husband that if we were going to get ANY of these 23, that probably would be our best chance. He said that a lot of others at the sale may be thinking the same thing. Two of them WERE. The mortgage company made opening bid on the home, my husband battled in $100 increments with two other sharks in the pool and we won the bid at $35,500!!! We had confirmation in less than 2 weeks…the locksmith drilled the locks out and we were in the same day. The house is in GREAT shape! Needs the usual painting and carpet-steaming and some minor repairs (bathroom caulking, etc.). 3 BR, FR, LR, kitchen and 1 bath. The yard is a field, naturally, so we hired a guy to come out and mow, but he hasn’t shown up yet…which gets me to the GOOD news! We went out to check the yard to see if the guy was there today…he wasn’t and we decided he’s “fired” already as our RE lawncare service…haha…My husband checked the mailbox and found the following note in it:
“To Whom It May Concern:
I am interested in buying this house. Please give me a call at Home (#), Pgr. (#) or my office at (#) (Ext.). My name is (name)…Give me a call.”
There was laughter heard within a 10-mile radius from our vehicle as we drove away and grabbed the cell phone to see what this guy had in mind. It seems he is currently renting a home 2 doors down from ours…recently divorced…has no down payment saved and was going to buy the home he is living in now, but he says the house we bought is in MUCH better shape than the one he is living in that the owner wants to L/O to him for $45,900. He is interested in L/O on our home…says he’s interested in paying $50,000 for it and will do ALL maintenance, etc., and we “wouldn’t have to worry about A THING.” We know that we’ll have to check him out thoroughly, but what does everyone think of this?
Sorry so long…we are just amazed that we didn’t even get the grass mowed yet or have to lift a finger to do ANYTHING to the property and are now looking at making $14,500 in 2 weeks doing NOTHING but picking up some checks and bidding at a sale. Is this too good to be TRUE? Also, if you are involved in a L/O to someone on a property, can you still pull a mortgage out of it at 80%?
Thanks for reading…hope everyone is doing well!