Loads of Equity without Access!

7 Replies

I currently own a property in the District of Columbia with approximately $500k in equity.  I am looking to gain access to some of the equity to capitalize other real estate deals.  My credit is decent, but I have another property that is pending foreclosure.  Any suggestions would be great.  Thanks in advance.

Could you clarify?

Is the approx $500K for a single property you own and the property pending foreclosure something you're going to buy?

Hi,

The property pending foreclosure was my former primary residence in Maryland. I am currently in the middle of rehabbing the property with equity with plans to move into the property. I need access to the equity to get serious about investing, wholesaling, etc.

Originally posted by @Ronnie Thaxton :

Hi,

The property pending foreclosure was my former primary residence in Maryland. I am currently in the middle of rehabbing the property with equity with plans to move into the property. I need access to the equity to get serious about investing, wholesaling, etc.

 I'm gonna be honest and say "um. I dunno." It looks like you may need to sell it before the bank takes it, losing your equity and tanking your credit. I haven't experienced that problem myself, so you can take that advice with as much salt as you'd like.

Get a lawyer ASAP. As the bank still may have recourse, which they will pull your credit and if they see you own other property (with equity) they can go after that.

I have a friend who makes great money and sold a home via a short sale, a year later he gets a letter from the lender taking him to court over the balance because he was making great money. They settled out of court for $0.30 on the dollar but it was still a large chunk of money he had to poney up. People think after foreclosure or short sale they are free and clear, but that is not the case in many jurisdictions. '

Secondly, as it relates to investing, you will have trouble getting $ from private investors knowing you have a foreclosure as why would someone want to give you money if it gets negative equity. Taking only the good deals and walking from the bad from a business perspective seem logical, but it will hurt in the long run as your path to getting lending will be severely restricted.

Originally posted by @Ronnie Thaxton :

I currently own a property in the District of Columbia with approximately $500k in equity.  I am looking to gain access to some of the equity to capitalize other real estate deals.  My credit is decent, but I have another property that is pending foreclosure.  Any suggestions would be great.  Thanks in advance.

So you are trying to access the equity in an unrehabbed and uninhabitable property prior to getting the property in a habitable condition? Is the 500K equity based on current condition of the property or ARV? What is the value of the property/mortgage for the property that is being foreclosed on? When you say pending foreclosure, any information on the exact stage of the foreclosure?

Yes, the property with the equity is currently being rehabbed in DC. The ARV will be approx. $700k, mortgage is only $55k. I want to get a loan to finish the rehab without depleting my cash reserves.

The Maryland property is in foreclosure. I attempted to short sale, but a IRS lien on the property stopped the sale. 

You need to go to a hard money lender, but you also need to figure out an exit strategy for taking out the hard money lender. I'm in Maryland and have one that would probably do the loan for you at 50% LTV of the ARV $350k.. They would setup draws for the work to be completed and you would have to pay off the 1st mortgage. 12% interest 3 points and a 6 month loan.. but again you would need a plan to pay off the HML after your rehab it completed.. (You may be better off telling them you are going to flip the property)