Hello BP community,
My name is Keith, and I recently won an investment deal on Auction.com. The final bid was for 125K, and the property's resale value is between 189 - 199K.
The property is in the foreclosure process, but the previous owners are still living there. My current Hard Money Lender requires an appraisal, but I'm unable to get one, due to the home being occupied. I wanted to use my Business Credit Card for a down payment, but the lender wants the cash funds in the account (new Business Credit Card - I have to wait a time period to transfer a high credit amount to an account). I'm not sure what to do at this point. Is this invest a loss (new investor mistake - lose $2,500 deposit), or can this deal be saved?
Without knowing the terms of the contract, my suggestion if you are trying to get out of the deal is to use to inability to get an appraisal, which in turn is your inability to get a loan. This might get your EMD released, again depending on the contract terms.
Your only chance is to go try and make nice with the current occupants to see if you can get your appraiser in there.....unlikely, but maybe. That still doesn’t solve your “cash in the bank” issue, which you should have known about before.
Offer the current residents money to let the appraiser in. Money often works. Any other source for the down?
Next time plan on cash only for auctions.
@Shannon Wright, thanks for the information, I was able to get my EMD back :) Thank you!
@ Wayne Brooks, making nice with the former owners would be nice, but you're right, who would do that especially if you know the house will be gone. I explained to the lender that I was using Business Credit Cards for the down payment, and that I was just acquiring them (there would be restrictions as to cash transfers for a period of time). I think there was a misunderstanding as to what could be done. Thanks you..
@ Lynnette E., cash for entry would be ideal, and I was reading where people would give cash for keys (encouraging the former owners to leave early). As for another source of income to take care of the down payment, I will use my investment fund (next time:) that I used to purchase my duplex last year, but I have to pay off the balance that I borrowed first.
Thanks everyone for taking the time to help me with your suggestions. In short, I thought that Business Credit Cards, even though they are great for business purchase, presents a challenge in the beginning when using it for the down payment.
I'm learning as a new investor, and it's encouraging to see that others like me, that have made mistakes, learned from them and have gone on to crush it with their investing.
Thanks again everyone!