What type of funds would I need?

[Sharon R.]

If I were the buyer and located a REO prop I want to buy, but need the $ from an investor who could co-hold the FDT for 2-6 months while rehabbing for mortgage loan, (could have buyer $ in co-bank or escrow acct), would that be considered as needing a wholesaler?

[Jon Holdman]

A wholesaler is essentially a real estate agent. Not a lender. A wholesaler might be a source for a property, but REOs are usually purchased through the normal process using agents.

The cheapest way to buy a REO and fix it up (to rent?) would be to get a conventional loan with a down payment and then fund the rehab out of pocket. That will cost you the least in interest, but does require a significant down payment, typically 20-30% and the money for the rehab. And if the property is in poor condition, conventional lenders may not make a loan against it.

You may be thinking of hard money. Hard money loans are made on fixer propertiies. Some lenders will fund part of the rehab costs, too. Terms vary widely. Some require a down payment, some don't. Some will lend based on the "after repaired value" or ARV. Rates and points are high. Assume 3-6 points and 12-18% interest. Even with a hard money lender, its very likely you will need some of your own cash.

I suspect you want to do the refinance using a new appraisal after the repairs have been completed. Assume that you will need to hold the property for a year before doing this. With the right lender, you might do it in six months. Don't assume you will be able to get any cash out of the refi. The last one I did like this I had to put money in to complete the refi.

When you do the refi, you will need to qualify. That means having good credit (720+ probably), enough income to support the loan and some cash reserves. As a new landlord, you won't be able to include the rental income. Once you have two years experience as a landlord, you can start including your rental income when qualifying for loans.