All Forum Posts by: Mel F.

A bit of a delayed update, but I was actually able to get my electrician & his wife into this house on a Rent To Own with $5,000 down & $1,000 a month. He moved in right before Thanksgiving & has been like clockwork! 

He & his wife are thrilled to have the opportunity that no bank would give them to purchase a home. 

Thank you for all the encouragement.

Im doing an 80% LTV through PENFED...

By strategy you mean by an all cash project (purchase+rehab+lease to tenant) and then refinance? This will depend on your lender. Some lenders won't have any seasoning requirements for their commercial/portfolio loans and will do the cash-out-refi (COF) on an appraisal on any day. Some lenders will want to wait 6 months to a year before they'll allow you to COF based on the new appraisal amount.

The last lender I worked with also wanted to see that the property was leased out after the rehab (property was "performing").  Hope that helps!

Update: I sold my primary residence last month, paying off my HELOC and pulling out the remaining equity, like I was planning on last November :)

LOC might be riskier in the long run as the rate wouldn't be fixed. I play the same "game" with my primary residence. Instead of refinancing, I obtained a HELOC and have been using that to do my real estate investing. I've used the HELOC to make down payments, finance a flip, even do a few all cash purchases with the intent to cash out refi, just like you're mentioning.

I'm making interest-only payments on the line right now and there is an option to convert it to a straight amortized loan later down the road if rates rise. I have been acquiring a lot of rentals and If it came down to it, I don't mind selling my primary to wipe that HELOC clean, pull out my remaining equity, and start with a clean slate (assuming house prices in my area don't take a nose dive).

I really don't plan on selling my rentals any time soon, like I would my house. So If I had immediate use for the funds, I would probably just do the refi in your situation! 

@Mel F.

His credit is already in pretty rough shape as he probably has missed a year of payments.  A BK might actually be better for his credit because it will give him a clean slate to build from.

$712/month on $76K in principal does not sound like a great loan to me.  With no equity, what's your upside?  Leasing it back to him in any form is, by definition, a high credit risk.

Unfortunately this property is in no-man's land.  If he owed more, we would pursue a short sale and see if we could beat up the bank.  If he owed less, we would use some approach similar to what you suggest.

Think of it another way.  Would you buy this property for $90K putting $14K down and then rent it to a tenant with credit issues?  I bet there are cleaner sub2 deals with these terms in your market.

I'd recommend he pursue the bankruptcy and stay in touch with him if he doesn't get an equitable workout.

 Melvin,

Have you used this website before? I have read some negative reviews 

I'm considering going threw a hard money lender. Questions I have is I know hard money has a higher intrest rate but also allows you to get in and get things started. Does 100% on rehab and purchase still exists with hard money? Or even 90% ltv with 100% rehab cost at 65% ARV ?

Thank you 

Wanted to break the ice and see if I can make some connections with locals out there. I've got some deals in the works that I don't have enough funds for at the moment or that doesn't fit my model right now that maybe some people on here may have interest. There out of the Shelby/Gastonia NC area. Some good deals and would rather help out a fellow BP member than see a deal pass by.