All Forum Posts by: Nick Thurston

@Jerome Hanson That is correct, that's exactly what I was asking. I think what Chris was getting at was basically what you said - that the banks won't like it. 

So it seems my answer is that it's possible but highly unlikely and even more so in the competitive market that I'm in. 

Looks like I need to make some friends!

Ah. Now I get it. Bummer. Chris Mason Thank you for the input

lol I think I'm getting it Chris Mason But if all the money goes into escrow in order to be transferred to the seller at closing, then technically couldn't the seller just carry back that 3.5% that the bank won't cover? Say with a personal note over 5 years for example? Essentially becoming my PML for the deal. Of course with $3,500 being the down payment it doesn't make sense to do that, I'd just save up, but in my neighborhood where 3.5% could easily be $35,000 it makes a lot more sense when I can't come up with the cash all at once. But am I right that this would be possible? Or is it an absolute necessity for the money to enter the escrow account before closing? I mean of course the seller could basically write a check into escrow on my behalf knowing they're going to get it back in 10 minutes, but that just seems redundant. Thank you for your patience. I just really want to understand my options. Of course, as mentioned before, the scenario I'd be looking into would be one that I could refi and cash out after the rehab in order to pay off the personal note but keep the 30yr with the bank. Thanks again!

Thanks Darius Striglers & Chris Mason r I think I'm understanding now. I've never purchased a house so I was unclear on where the down payment actually went. I'm understanding it's me writing a check to the bank, not to the seller? Presumably as good faith? Anyway, now I see that my idea will not work. But that's why I'm here! :) Next step is maybe find a money partner to cover the down payment?

@Chris Mason So theres no way to have the seller finance that part of it?

Forgive my ignorance.

Hey everyone. I need some validation. I mean, I want to know if the idea I had in the middle of the night is worth pursuing and if so, I would love some advice on how to proceed. Im brand new to REI, never purchased anything.

I live in the SF Bay Area so everything is crazy expensive. Currently I rent a small apartment for a price that I could buy three of my moms house in North Carolina. (It's a nice 2 story 3/2 with 3/4 acres in a beautiful area.)

I've been looking at purchasing but anything in the neighborhoods that would work for me is way out of my price range and anything that would be a good deal is snatched up too fast by them danged house flippers (who I wish I was one of.) :-p

Anyway I've been looking to house hack either a multi family or a SFR with an in law (live in the in law) but everything is so expensive that even saving up the 3.5% would take me forever and I unfortunately currently don't have anyone I could ask for it.

My idea is to somehow find an off market deal (less competition) that needs a bit of work. Use a 203K loan to rehab it and ask the seller to finance what would have been the down payment.

Then once the rehab is done and the required time is up, refi to pay off the seller and maybe even have a little cash to put towards another deal.

Thoughts? 

I'm down for a Vegas write off.

Enter the 203K loan, right? @Robert Rayford The 203K will cover an extensive rehab even if it's not currently in livable condition. Hell from what I read on the HUD website, I could even use the loan to buy a single unit and convert it into a 4 unit.

The plan, as I see it now, is to:

1) Find an off market deal (in order to eliminate competition) Or use "love letters" to ask that seller choose myself as an owner occupant over an investor

2) Purchase using an FHA 203K loan with 3.5% down

3) Perform the rehab

4) Move in

5) Reappraise and refinance or HELOC after minimum required time

6) Use cash to fund next project

Am I on the right path?

Obviously the details in between will need to be figured out. IE, finding an off market deal which makes sense for the plan, finding an FHA approved GC to perform/manage rehab at investor friendly pricing, etc.

I'm all ears (or eyes) to anything I may be missing or need to be aware of.

@Robert Rayford @Robert Marston @Chris Mason Thanks for the info guys.

It is unfortunate how competitive the market is around here, especially considering I'll be looking for an FHA loan for the first deal. Wish I had cash or a money partner, but alas, I do not.

@Robert Rayford I appreciate the offer, I may just take you up on that.

I'm hoping to try and find a deal off market somehow because of the competitiveness. Driving for dollars my best bet?

No problem! It really is a great book, he's straight up and lays it all out. Of course I haven't yet had a chance to put the info to work myself, so I'm sure theres more detail to be found out there, but it's a great foundation. I also recommend his accompanying book "The Book on Estimating Rehab Costs" (no im not getting paid to promote him or other bp books lol) I just like the way he organizes everything in such a simple straight forward way.

Good luck to you! I know I cant wait to finally put it all into play myself.