Investor · Lusby, MD · Member since 2015 · 30 posts · 4 votes
My strategy has been buy foreclosed properties that need work pay cash for them (using HELOC on personal home). Put in sweat equity to fix them up and I rent/maintain them myself. In 6 months I get a cash out 30 year mortgage for 80% appraised value. So far the houses have appraised well where I was able to get all my money back and pay off my HELOC. Now I have an investment property where I have none of my own money involved in. Even if I can do this and put under 10% of personal money into it at the end it still beats putting down 20% on investment property. I have done this 3 times so far.
Doing this method I am basically paying closing cost twice (once on original cash purchase, and again in 6 months when I refi). Is there anyway to delay or not have to pay all the closing costs twice? (recording fees, etc....)
My strategy has been buy foreclosed properties that need work pay cash for them (using HELOC on personal home). Put in sweat equity to fix them up and I rent/maintain them myself. In 6 months I get a cash out 30 year mortgage for 80% appraised value. So far the houses have appraised well where I was able to get all my money back and pay off my HELOC. Now I have an investment property where I have none of my own money involved in. Even if I can do this and put under 10% of personal money into it at the end it still beats putting down 20% on investment property. I have done this 3 times so far.
Doing this method I am basically paying closing cost twice (once on original cash purchase, and again in 6 months when I refi). Is there anyway to delay or not have to pay all the closing costs twice? (recording fees, etc....)
Thanks
You could bake it into the initial offer. This might be a conversation between you and the listing agent.
Let's say it's a $500k property.
"Mr Listing Agent, I'm flexible and open to working with you on the timeline. I'd be happy to offer $500k, if you give me time to get a mortgage (and/or reno mortgage if it's a reno scenario), or I can offer $477k if you'd like me to close in two weeks with cash. Up to you. Which would you prefer?"
Closing costs obviously aren't going to be $23k, so you win either way. And now rather than the listing agent deciding between multiple buyers, you've hopefully got them deciding between just the two options that you have presented.