Posted by rob blake on February 02, 2000 at 02:39:33:
Look at it from the lender’s perspective. They make money by lending at a rate of return that is compromised if the loan is paid off quickly. In other words if I lend you money, even hard money, at say 1 point and 12% and you pay me off inside the first month of us closing on the loan…what did I make for my risk (as minimal as it is, there is still risk involved)? I made a lousy 1%, the 1 point I charged up front…no cash flows at all. You must structure deals with the approapriate money source and make it profitable for them as well. If I knew more the details I could answer your question better. Just remember, there is usually a way…if you know the financing. The time you spend learning how a lender makes his decisions is time well spent. As a mortgage lender by trade and investor by choice, it surprises me how many folks spend so much time working our the minute details or their “win-win” deals with sellers, but don’t give an ounce of thought how to make appealing to the money source they are using to close on the deal in the first place.
Kudos to you for getting this far…a little refinment and you are there.
PS: If I understand your deal, the lender stated they would lend you the 45K balance to payoff HUD, you would then own the property. You could then resell to your buyer who was going to put down 10%. Nothing wrong with that deal unless you have some reason for not wanting to be on title? You have no money in the deal, you get $7500 cash down and a 30K note with a payment stream you could sell for more cash or keep. Sounds like a winner to me.
I may not be seeing everything. One thing is for sure, if you are going to persue this, you need a good mortgage broker to go to bat for you. In most flip transactions, you don’t get the loan. You write the contract, tie up the property and then assign your contract to the your buyers (usually cash buyers…a 10%-15% discount off market brings them running) at closing. If you are trying to sell to someone needing financing, they have to get the money from a hard money source, not institutional lenders. They are not in the business you are in. They want to see everything, including 12 months seasoning…hard money just looks at loan to value.