Need advice on this situation!!!!!!!!!

7 Replies

My mother has (2) houses FREE & CLEAR  in her name. Her credit is not the best and I'm in the long process of cleaning my credit up to. I need advise on how we can get the equity in the houses to acquire other properties.  Any and all good advise will be honored and appreciated!!! Thanks  

@Bruce McNeil - Depending on the quality and location of the homes you could possibly find a private lender on here who would be willing to carry a note on them. Consider putting up a post in the marketplace. You'll likely need to prove your worthiness in other ways such as income.

Dan Mackin, Real Estate Agent in CO (#FA.100056958)
720-971-7139

Hi Bruce,

Consider a hard money lender that doesn't look at credit and using the houses as additional collateral.

Use them the same way on a seller financed transaction.

Does mom live in one? Check a reverse mortgage.

Find a landlord willing to trade, booty can go either way, seller financing the differences.

Know any "private" investors/lenders?

Use your equity in a partnership with a stronger partner. 

Seller finance a house and sell the note, consider the discount and don't over value the sale.

Use a reversionary deed selling to an investor for a certain period, 100K home for 10 years for 50K (Just pointing out the idea, not suggesting real numbers). What you're selling are lease payments with ownership responsibilities.

Next, a lump sum master lease to another investor, $XX for a 5/10/15 year lease. Commercial lease arrangement could be triple net.

Straight lease-option can net you an option price from an investor, be prepared to sell later on.

Try those options, if they don't work I can get more creative. Good luck :)

Please let me just point out that if somehow you are able to finance some money out of the two houses that are already owned free and clear will you be able to get enough money out to do a solid deal? You should have a solid plan about exactly how you will use the money and make sure of your figures so that you are confident you can pay back the financing comfortably. Be prepared for Murphy's law, " that if something can go wrong it will". Ask yourself what you would do if anything with any new deal would go wrong and then consider if it is really worth it to risk losing either one of the existing homes which are already paid off in full. Think about what it will mean to your mother, yourself, your family and just life in general for all of you if anything should go wrong with any future deal you plan to make and make a plan to avoid any mishaps. Have a back up plan in place and money set aside. Do not put all your eggs in one basket. 

Let us say you are able to pull $120,000.00 out of the existing homes your mother owns right now . I am not saying it will be $120,000.00 I am just using the figure to point out an example. Set aside some money to pay back any would be investor/lender and do not let or depend on your new real estate deal to pay back the investor. Then as soon as you can see if you can transfer interest in your new deal to the investor so you can free up your existing houses as soon as possible.

Have a line of several deals you could make all that make good financial sense, low risk with a good potential for resale or rental income. Do you plan on working and doing real estate deals or will you be devoting all your time with new real estate deals? Are you making plans for your ongoing living expenses and how about improving your existing credit. Will you include a plan to work on your credit, one that will work for sure?

Let us say you are able to pull X amount of dollars out of the existing homes your mother owns right now. You can use X-A. A being what you will use for your new deal or deals and The remainder to be set aside to assure your payments to an investor/lender. I am trying to get you to think about minimizing your risks. 

If you are going to be buying a flip-rehab use licensed contractors to give you actual figures to help you make sure of what the costs will be in the case things go this way. 

I am suggesting you do everything in your power to make sure that you succeed because you will not want to face things if they should not turn out right for you and you should do everything in your power to avoid a loss. 

Others on here are better qualified and more knowledgeable than I about how you can go about pulling financing out of the existing houses you mentioned your mother owns outright at present. I am just giving you food for thought. I hope you find it helpful and do not mind my input. Remember things like vacancy rates, maintenance budget, tax and insurance for your deals. 

Cash out Refi through a credit union, I'd avoid the hard money lenders if possible.

What are you trying to accomplish?  It'd be easy enough to pull some cash out of a paid for property that isn't owner occupied with hard money, but the rate would make buying another rental cost prohibitive.  You could fund a flip that way, though.

Like has been said, if your credit isn't good, you probably aren't going to get bank financing, no matter what the equity is.  Credit Union's are similar, just having equity isn't enough, you have to show an "ability and intent to repay" as they taught me in finance class oh so many years ago...banks and credit unions are not collateral lenders.

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