Updated almost 17 years ago on . Most recent reply
Cash at REO closing
I'm trying to see if it is possible to get cash at closing when buying a REO. I'm interested in one that is listed for $90k but needs about $20k in rehab. this is still well below FMV, but I don't want to "suck" up the whole burden of Closing cost, downpayment, and the rehab myself. Any ideas?
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You get a loan for the purchase with a construction loan. Together they total about 75% of the future value of the house.
Your down payment is % against the purchase price not future value.
Make sure you marke up your costs since you should be paid for doing that work and you are laying out cash. We do COGS x 1.5 as "price" of improvements. YOU MUST keep good records and make sure you have hard numbers on the repairs, not a napkin faced "guesstimate". Use an excell sheet or Quickbooks. Not a shoe box.
The whole loan deal rolls into a single fixed payment in 12 months. Until then you pay only interest.
We just did this deal and we have a tenant now while the house is listed for sale.
Best of luck
Diane