Creative financing question

3 Replies

I have recently started a company and I am thinking of investing in real estate with my income before taxes.

I have no idea how to explain this so I will use a scenario. If at the end of the year I had $25,000 to invest that would give me 5% down on a $500,000 property.

Let's say I found a property for $450,000 and wanted to put $50,000 of renovations into it. What would be the best way to obtain the $50,000 of financing?

Could I ask the seller to write up the price of the property and then loan me the 50 grand; get the lender to give me the additional 50 grand on the loan, or try to get another loan for the $50,000?

Typically you can't get the seller to increase the price and give you cash back. That's loan fraud. What you would want to do is look for contruction type loans that loan you money for the fix-up.

Originally posted by "gfwproperties":
Typically you can't get the seller to increase the price and give you cash back. That's loan fraud. What you would want to do is look for contruction type loans that loan you money for the fix-up.

That is not loan fraud. The Seller can give credits for the repairs of items in the home, such as new carpet, painting, etc. As long as it is disclosed to the lender on the HUD, IT IS NOT FRAUD.

I have had a deal disclosing numbers to the lender on the HUD. The lender came back and instructed us to remove the numbers from the HUD and deal with that situation after closing. That was instructions from the lender.

I think we need to be careful about using the word fraud every time a Buyer gets cash back. It is not that simple.

Yes, good point and I agree. You can get credit back towards closing costs, etc and it's not loan fraud. You can also get money put in escrow from seller for repairs. The key being that it is on the HUD1.

That surprises me a lender told you to remove credits from HUD1 and handle after closing. I guess every lender can be different.

Thanks for the correction on my original statement!