Off Market Deal Question
Hey guys! I have been doing a tiny bit of driving for dollars and as I prep/goal set for 2018, I told myself that I am GOING TO find, and close, my first deal next year. I plan on really ramping up on driving for dollars to find some off market gems. I am also going to try my hand at direct mail marketing.
Long story kind of short, if I drive for dollars and send a letter out and someone agrees to sell me their home for pennies on the dollar, can they accept regular bank financing? For example, if I get a prequal letter from a bank saying that I am approved for a loan up to $500,000.00 USD, and I find a house valued at $325,000 and the owner agrees to sell it to me for $200,000, can I just use the bank's money and give it to the seller?
The reason I am so confused about this is I feel like when I hear stories about wholesalers, direct mailers, offer market deals, I ALWAYS hear about people "paying cash". I don't have $300,000 sitting around and I don't want to deal with a private lender so I wanted to know if conventional financing works for off market deals.
As always, I appreciate ALL comments ;-)
Originally posted by @Andrew Syrios:
You can only borrow 75% of the purchase price (or perhaps 80%, whatever LTV the bank will allow) and use that money to purchase the property. But if you're approved up to $500,000, you can certainly borrow any amount less than that.
Yes; so long as the OP understands that if he wants to buy a $500k property, their loan against that property would only be $400k - if that! [ie. He must already have the difference!]
ie. If he wanted to borrow the full $500k, he'd need to be buying property costing $630k+!
Originally posted by @Brent Coombs:
Originally posted by @Andrew Syrios:You can only borrow 75% of the purchase price (or perhaps 80%, whatever LTV the bank will allow) and use that money to purchase the property. But if you're approved up to $500,000, you can certainly borrow any amount less than that.
Yes; so long as the OP understands that if he wants to buy a $500k property, their loan against that property would only be $400k - if that! [ie. He must already have the difference!]
ie. If he wanted to borrow the full $500k, he'd need to be buying property costing $630k+!
Absolutely. With banks it's always the worst of two options (i.e. 1 point or $2500 fee, whichever is higher). So it's up to $500,000 as long as that doesn't exceed the LTV requirements.
I've seen some decent modern infill spec construction by Anamic Construction. I don't know them. I've just walked some of their open houses and thought they did a decent job. They have done zero lot line duplexes and ADUs so they seem to know the particulars about Portland zoning. You could get in touch and find out what they've got in the works.