Let's say hypothetically I was interested in a home that I knew needed some upgrades to maximize rents. If I can qualify for a 100,000 and the house is listed for 90000 can I make a deal with the seller to pay him the full 100,000 I can get but he returns $10,000 cash that will be used for drywall paint carpets and other non essential upgrades?
Is this possible/legal or commonly done and I'm just stupid?
Thanks for any insight!
So, if I read this correctly, you found a house listed for sale for $90,000. It needs about $10,000 in work. So instead of negotiating a better price (that would include a credit for some or all of the work that needs doing), you just want to pay full asking price, and borrow more to pay for the work?
Why on earth would you do such a thing?
A conventional lender will only lend you approximately the sales price - your down payment, assuming the property appraises out to begin with. Any other arrangement between you and the seller ("I give you the $10k and you give it back to me"), besides being pointless, may also be illegal: it could be construed as mortgage fraud, specifically fraud for profit or a cash-back scheme.
thanks @Leon D. I wasn't getting much help on this thread so I dug in for more research. I'm pretty sure what I'm talking about is illegal unless you notify the lender and they set the money for repairs in escrow to pay contractors. Does that sound about right ?
Btw I'm really leaning towards just negotiating a better price at this point anyways but I like to learn as much as possible.
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