Real Estate Investor · Chicago, IL · Member since 2010 · 37 posts · 10 votes
I'm looking at an incredibly cheap 2-family ($16,000) that actually has month to month tenants (~$1k gross/mo). The numbers could be very appealing no matter what "rules" you apply.
There has to be a reason it's a screaming deal, and I've not yet seen it; however, analyzing this deal brings me to an interesting question were I to pursue it.
Say I buy the property for cash, disregard any actual numbers; let's assume I have "normal" tenancy (10% vacancy) in the time leading up to the bank transaction. Let's also say I want to hold the prop in an LLC.
-How soon could I get any cash out (line of credit or refi)?
-On what value will they base any line of credit or refi?
Thanks and BP (not British Petroleum) is awesome,
Scott
Seems like a great deal on paper, but make sure to check it out. Look for any deferred maintenance. Be very careful of the neighborhood where you buy the property.
As to your questions.
1) How soon you get your cash out will depend on the bank you go through. Most of the banks have at least 6 months to a year or seasoning before they will do a cash out refi. But there are some local banks that have no seasoning requirements and will do a cash out refinance right after you close on the property.
2) Depends on the bank, I have noticed that some banks will do cash out on the lower of your purchase price or the ARV. Some local banks will do cash out refi on the ARV as soon as you close.
Seems like a great deal on paper, but make sure to check it out. Look for any deferred maintenance. Be very careful of the neighborhood where you buy the property.
Yeah, that's why most of this question is hypothetical.
You got me looking in NW Indiana, how has your experience been? I saw in a post that you're avoiding Gary.
According to the University of Chicago (proponents of the Efficient Market Hypothesis, albeit not talking about RE), a deal like that doesn't exist, because if it did, someone would have already bought it.