I have been looking through old posts and scouring the internet for information, but I need to reach out for some advice, at least on one topic here. There is a property that I am interested in, and I have about a dozen different questions regarding this particular deal, but I will try to keep it sort of simple. This feels complicated, but I'll do my best to make sense here:
- Rather than flipping, there is a property I am interested in purchasing for myself to live in.
- This property is an REO.
- The dwelling is in bad shape and in need of (potentially) considerable rehab. Due to the condition of the home it is only available for cash or with a rehab loan.
- I woud co-own this property with a family member.
- I should close on my current home, hopefully this week, providing us with a good 50-65% of the purhcase price for the REO of interest.
- We need, probably, another 100k to $125,000 to secure the REO, in addition to the cash we will have to put into the REO.
- Because my family member is in the process of applying for a loan to build a home, after purchasing a parcel of land, it is not the time to make this second investment into the REO just yet. The building loan application will take another 1 - 2 months.
- Once that build loan is secured, I believe we would be extremely eligible for this much, much smaller loan for the REO, for example with a FHA 203k.
- Invisible loan: Is there a way to get a rather short-term loan that would not show up on financial checks, possibly with deferred payments, in order to avoid any interruption of the build loan currently being applied for?
- Is there a way to acquire a private / hard money loan for a couple of months to secure the REO and get through this interim period?
I am not interested in doing anything foolish. We have never before borrowed in this fashion. I just can't think of another way to make this REO happen and I would hate to see the opportunity disappear because of the difference of a few weeks.
There is a whole lot more homework that I would need to do before proceeding with the REO purchase even if funds were available. I just don't want to entertain inspections, contractors and the whole kit and caboodle if there is probably no way to fund the entirety of this purchase without interfering with the build loan that is already under way.
Maybe there are other hitches that I am missing in terms of the guidelines for refinancing, possible barriers for a rehab loan, and so on. I realize that I don't know everything, but I am trying to be smart and think this through. Thank you so much for any help.
Invisible loan: Is there a way to get a rather short-term loan that would not show up on financial checks, possibly with deferred payments, in order to avoid any interruption of the build loan currently being applied for?
Is there a way to acquire a private / hard money loan for a couple of months to secure the REO and get through this interim period?
You living in the house is going to knock out the vast majority of HMLs. They don't want the hassles of a residential loan. A private lender (someone you personally know) is still subject to the regulations for residential loans.
Even if you manage to get some "invisible" loan that doesn't show up on your credit report, it will still likely be a problem for the other loan. At some point a loan application is going to be signed and it will have verbiage about this being a complete picture of the borrower's finances. If there is some loan that's not on their credit report, they would still need to reveal that to the lender.
That new loan is going to affect your co-borrows credit and DTI. Have you carefully done the calculations to ensure they are still qualify with the new loan in place?
Jon Holdman, Flying Phoenix LLC
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