Buying 35,000 in equity!!?

Question

My first deal and there is so much to still learn! I am currently working a deal with  two 9,000 sqf commercial lots with one 3500 sqf building on one.

The owners owe 10,000 in bad taxes witch I would pay when it's under my name plus 3,000 to the owner as well as covering all fees.

I would need a total of 15,000 to buy the property witch the county  assessed at 35,000. My RE broker suspect it will  appraise at a minimum 50,000 as is how ever she will be doing a BPO to get a better idea of what we are working with.

Can I buy this property with hard money and  immediately refinance to pay back the loan and start construction?

Thanks in advance for your help!

Daniel Chang · Answer

Esteban,

What is your plan for the property?  Make sure you have an exit strategy.  Since this is commercial, without active cash flow, this may be a hard property to "refinance".  Refinancing commercial does not work the same as residential.  Make sure you look into this.

Patrick Liska · Answer

Yes, essentially you are going in to the closing then with a cash buy which gives you full equity.

Esteban Camacho · Answer

Thannks Daniel for bringing that to my attention. I will definitely have to look in to that. As far as an exit plan goes I would either whole sale, rent out the building as storage, lease it to some business or build home and or a couple apartment

Esteban Camacho · Answer

Thank you for your help Patrick I'll make sure to pass it on whenever I get to that's point.

Patrick Liska · Answer

Sorry,I do not know any, but i am sure there are plenty on this site.

Esteban Camacho · Answer

Great I'm really excited looks like every thing will work out. Do you recommend any hard money lenders that would be willing to work with some one who is starting out like me?

Patrick Liska · Answer

Once you have the house, refi like you said either do a cash out loan or a equity line ( which may be a good choice for you )this way you lock in a rate now, as you pay down the line it is available for you again. take the money ( if you get 80% LTV thats 40,000 if it appraises for 50,000 ) you can pay back your hard loan and have money for repairs.

Esteban Camacho · Answer

Thank you Patrick I really appreciate it! So once I build more equity into it can I then refinance again and put it back in to the property? Or is there a certain time I must wait to be able to refinance again?

Buying 35,000 in equity!!?

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