Rehab Loan (Seller Finance)

Real Estate Investor · Waldorf, MD · Member since 2014 · 592 posts · 320 votes

I have a 3 unit property in 21223 that we're trying to convert to a 4-plex in Baltimore. The seller wants to do owner finance but we don't have the rehab cost. Who would you recommend for rehab financing?

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Brie SchmidtBusiness Member
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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
7y
@Account Closed - at the top is a NETWORK tab and under that is a HARD MONEY LENDER tab you can search
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Account Closed
Professional Auctioneer · Baltimore, MD · Member since 2015 · 1k+ posts · 1k+ votes
7y
There are many ways you can recast this deal. first things first, close the deal with attractive seller financing. ask the seller to add settlement cost into the mortgage.

consider some of these in your mortgage conditions ( put some or all of these terms in your offer) make sure you understand the value of these clauses - if not, give me a call glad to chat.

1. put a subordination clause in the mortgage, this will allow you to get a new first and have the seller financed in second position.

2. have a pay-off discount of 5-10% so if you get a new mortgage or sell the house you can discount the seller mortgage, this could save you thousands of dollars.

3. have the mortgage secured by another property you own - this will make your property free and clear, now get a new mortgage, keep the proceeds or use it for renovations.

4. have a stutter clause, this will allow you to miss one payment a year.

5. have a first right of refusal in the mortgage in the event the seller (mortgagee) try to sell the mortgage at a discount, this gives you the option to benefit from the discount.

6. the mortgage should be fully assumable without qualification with release of liability. this makes your resale attractive since you have financing built in.

7. ask for a delay in making payments (6 months) this will free up some of your cash for renovations.

good luck with it -- Charles

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