I ran across an auction property (duplex) in Baltimore that is going for $40k. We were able to walk it with our agent prior to auction and the place needs very little work (has new carpet and new paint - appliances needed). Our agent called the auction listing agent and he confirmed that we can put in a pre-offer and if it is high enough they would take it off the market. Finished property values are at $80k in the area and rent for $800-$1000. We have private to put a down payment on the property for 20% but our mortgage brokers stated that the money needs to be seasoned for 60 days. How do I get around this? What type of banks/ institutions will give me a loan and not require the money to be seasoned for 60 days?
@Michael Washington unfortunately you have more than one problem. First you are trying to finance an auction purchase through a Mortgage broker. A traditional lender is not likely to do that. Auction terms are due in 30 days. It is a risk to expect you can get the financing done that fast.
Now since you are buying pre-auction the 30 days is something that can be negotiated with the seller. However the fact you are expecting financing means the owner will be less interested in your offer and may expect a higher price.
Next, is financing for investment properties is very tough in Baltimore. If you are expecting to purchase in an LLC, it is extremely tough to find a lender. If you have solid w-2 income a great credit score and you take title in your own name then it may be possible but can still be difficult.
Even if you find a lender that says they will do it you may have troubles with getting an appraisal that supports the value. Lenders can also have criteria like no board ups on the same block. That rules out 60% of the city.
I sell a lot of properties via auction. I would not hesitate to keep your deposit if your financing did not come through. However I am also always willing to work a deal that makes sense for me.
Make sure you mortgage broker is aware of these issues up front and make sure the auctioneer and seller are on board. I would hate to see you lose a deposit. Good luck - Ned
@Michael Washington To add to the prior response, which I completely agree with, Baltimore is not exactly a city where you can't find similar deals. I'll bet good money that there are more than a few similar listings on the MLS where financing would be more welcome, and there may also be seller financing opportunities that make good sense that are less risky than financing auctions.
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