All Forum Posts by: Tom S.

@Kendric Buford  Randy's post above covers it well!  Just adding to his point, if the seller is trying to sell for $300k but can't, it means it isn't worth $300k.  Definitely negotiate on that piece of the deal.

@Tyler Eastridge  Just adding to the above, I applied for a conventional mortgage recently and have 3 commercial loans and one seller financed loan, and none report to my credit.  I had to produce 12 months payment history for each of the loans, plus the original note and terms.  So just be prepared to gather that documentation.

@Demetrius Hopkins  Try an unsecured personal loan for the $25 - $30k.  I've used both SoFi and Discover in the past, both offered no points, fees or pre-payment penalties.  Funds in my checking account in 2-3 business days.  Only downside is they're shorter term loans, I think 4 years was the longest term, 12-13% interest.

You can also try local credit unions or banks that will hold the loan in house (portfolio lender), as they can have more flexibility.

Good luck!

@Dave Halevi You should consult a real estate attorney for your state, as each state as their own nuances.  I've done a few as a buyer, and generally the paperwork is $500 - $1000, and maybe $1500 including the title search (VT is an attorney closing state, so the attorney also does the title search).

I would add an appraisal contingency, the seller won't require it like a bank will, but it good to know you're not overpaying.

Good luck!   

@Michael Horstman  Can you raise any funds for the downpayment first?  I did a similar deal to this in the past, on a smaller scale, putting down $50k with the 1st position lender and closing the deal.  Then the seller executed the 2nd position mortgage which reimbursed my downpayment.  The $50k was a 401k loan that I took out for only a few weeks and repaid right back.  

As long as the downpayment was sourced like that, and the 1st lender approved the 2nd position mortgage, they were OK with it.

So some thoughts to try to make it work, good luck!

@Chris Thomas Even closing under an LLC, lenders will still require a personal guarantee, so keep that in mind. For tax purposes, the LLC is disregarded and the numbers will be reported on Sch E of your tax return. So when applying for new loans where the lender requires tax returns, it will still show there.

@Irving Casas  For properties that aren't livable at the moment, a commercial loan can be a good fit for purchase + rehab financing all in one loan.  Those typically would be commercial and held as a portfolio loan with the bank. It doesn't have to be multi unit, the "commercial" part is the flexibility to get the purchase + rehab financing.  Alternatively you could use hard money, but I find that's very expensive and also short term only.

You want to avoid standard residential conforming loans, those that most banks offer and are resold to the government.  I tried that in the past and it was a waste of time.  They would run all the numbers and pull my credit, and then when the inspection was done, the "non livable" part would kill the loan.

@Adonna Villanueva  Personally I would recommend local banks in your area, ideally where the loan officer knows the property in question.  Ask for the commercial lending department, and it should be a portfolio loan where the bank will hold it in house and will have more flexibility on their lending decisions.

I did this in VT with a few local banks, for properties that weren't livable at the time.  The fees are far less, most of mine were 1 point, minimal closing costs, and the loan would convert to a normal mortgage once the rehab was completed (no need to refinance out and incur a second set of closing costs).

Good luck!

@Aaron Anderson  Not PML, but I did a SoFi personal loan for $50k, for 12% interest, no points or fees at all.  No pre-pay.  Discover Loans offered similar terms up to $35k.  

@Emil Kostov  Have you looked into unsecured loans like SoFi or Discover?  I used SoFi in the past and they offered me $50k at 12%, rate is slightly high but it is unsecured.  Approved in one business day and funds in my checking acct within 2 more business days.

No fees at all, no prepay.  Discover offered similar terms although only to 35k.

Hope that helps!