All Forum Posts by: Dave S.

Im working with a seller that is willing to work with me on purchasing his investment properties (he wants to retire). Like most people want, I would like to minimize the cash out during the transaction / closing. What all can a seller pay for during a conventional closing? I've been reading that there is a cap at 2% seller concession. Are there any other items that i can ask for to be paid that dont count towards this 2%????

Maybe there is a simple answer to this that Im overlooking...Here is the deal. Property is worth $150K but Im purchasing for $125K, can I utilize this equity at closing some how???? If not when is the soonest i can use this equity and how?

So to preface this, an investor is trying to get out of the business. He has 8 properties. Im looking to buy two. I would of liked to get all of them but he thought we could start with two and go from there. HE CHOSE the the following two cause he stated they cash flowed the best (but he has them free and clear). Here are the numbers:

1st property is a duplex. Currently fully rented at $800 per side = $1600 total. One side is on a month to month (probably will be leaving in the near future and the other side is only into a 1 year lease by a few months. 

$1600 (Income) - $550 (Mortgage) - $350 (HELOC for downpayment and closing) - $350 (Taxes) - $160 (PM) - $120 (insurance) - $80 (Repairs) - $80 (Capital Exp) - $25 (Garbage) = (-$100) negative cash flow

There are a few things that could make this better:

- Im estimating high on the mortgage at 5% (property is being sold for $130K). This could be less maybe 4.5% and maybe get purchase price to $120K???

- I have a downpayment available but maybe not in time to close. So the HELOC could be a short term thing if numbers dont work out.

- The property today is worth $150K. Very similar houses are going for $75K each side. So there is equity in the property now. Should I push to get a better deal knowing that Im also getting a 2nd property from same investor? What is typically the investor "discount" under retail that you shoot for?

- Current property manager that this landlord is using charges 7% not 10% but uncertain as to quality of PM. 

- Its an older house that he stated was updated not too long ago. Is $160 a month good to hold for this??

Please let me know what you guys thoughts are. Very interested in understanding what you would do. Thanks in advance.

Here is the deal. The seller will be providing a good deal on a property. About $50k below market value. For easy math let's say it's market value is $150k and he is selling it for $100k. I would like to maximize this equity sooner than later and minimize the out of pocket expenses. Option 1: I can purchase the property at $100k and put down the 20%. After, I believe it's a 6 month wait, I can cash out refi. Since it's an investment property I can only cash out 70% of the equity and have to pay closing twice, once to purchase and once to refi. In the end I would have $25k minus closing costs and taxes. I believe you have to pay taxes on this correct? Option 2: I can do the same as option 1 but instead pull out a HELOC. Would I have to wait 6 months for this? I would still only be able to pull a Loc of about 75% correct? This would eliminate most closing costs, be quicker(don't believe I have to wait 6 months) and I won't have to pay taxes but will have funds available as needed. Option 3: Looking for a non traditional mortgage method. Is there a method of private funding available that I could use long term (30 years) and significantly reduce the closing costs banks charge today? If not is there something I could do with private money to purchase and refinance out with a traditional lender? I'm not in a situation where timing and a quick close is needed. Thanks in advance Dave

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Seller is agreeing to loan me the funds for a downpayment and closing on two properties. BUT wont have the funds until after closing is complete. I asked around to a few lenders and the maximum seller concession on an investment property is 2%, which can only go towards the closing and not towards the downpayment. What are my options? Would a bridge loan work? Did I just not find the right bank? Also from what I gathered you need to have the funds in your account for 60 days unless it's coming from a HELOC (which won't help me as has a max out of 80 to 85% of equity). Thoughts???

I'm looking to purchase a few units with 100% seller financing. The deal is that once the principle hits the necessary 20%, that I would refi out. My question is where should the downpayment be kept till then? Should he hold onto it? What happens if he spends it? Or at closing he spells me the property at x $, would he be able to put money down on the deal for me? Not sure how that would work? Please advise Thanks

Stephen Zipp You mentioned a loan of $70k. Most likely than not you weren't be able to get a standard loan for a house that would require $40k of rehab. Don't forget you will need to put down at least 20-25% depending on the loan you get. Just ensure you did your arv numbers right and stay on budget (ensure you have a contingency or buffer in Reno costs). You can cash out refi 6 to 12 months after your start Reno. Sometimes sooner. Depends on the bank.

I'm pretty sure I know the safe answer to this already but would like to know the following. When buying a foreclosure vs short sale vs tax sale vs sheriff sale vs auctions vs ??? When do I have to worry about "hidden" costs and fees such as 2nd mortgages, delinquent taxes I have to pay, etc?