My wife and I found a property in foreclosure yesterday that we love! It has two units, we plan to rent one and live in the other, and looking at the numbers, I think we can get cashflow out of it. It's in relatively good condition (the previous owner was recently sent to jail for running a Ponzi scheme) and in a good neighbourhood. The trouble is, they'll only accept cash, but we only have enough for 30% down, which would annihilate our budget for the cosmetic upgrades and purchasing appliances - which are missing. We wanted to finance via an FHA but given their cash requirements, I'm not sure how to approach the financing or structure a deal to take this further.
Any thoughts on how to get cash when you don't have it or another way to approach dealing with the bank for a foreclosure?
Firstly, understand that there's ALWAYS good deals out there. This one might be good, great, once in a lifetime. But, get good at evaluating them and also get good at walking away. It's extremely important if you're not in the right position to execute, buy, whatever.
That said, if you're short cash, there are investors, hard money lenders, etc. If you're brand spanking new though, and especially if the property needs work - that is going to sound like risk to a lot of investors. Investors need compensated for risk. Which means higher interest if you can get them. You usually can if you look hard enough. Look for hard money lenders if you're serious. Also you might make however many calls you need to make sure you're exhausting whatever equity (or retirement accounts) you have available.
I bought my first house with some % of my 401k for the downpayment. I can't remember how much it was but I came up slightly short in getting to 20%.
I wouldn't recommend this action for many/most but if you're at that age and are SURE (get some 2nd opinions and possibly post the numbers here for sanity check) that this is the deal that will kill it - then you may consider this route.
Agree, I'd look for a HML that can close quickly or a Private Investor that can write a check