All Forum Posts by: Tom S.

@Andrew Foley  For conventional financing, the lender will still use the lower of the purchase price or the appraisal, so in this case their valuation will be $269.9k.  If you go to refinance or get a equity line in 6-12 months, then they can usually use the newer appraised value.

@Syreeta McDonald  To my knowledge, for any conventional financing you can't have any outstanding bad debts like this, or judgments, past due taxes, etc.  Unless something has changed recently?

@Jordi Valado I think the biggest obstacle will be HML's that will let you be 100% financed between their loan and the business credit loan. Certainly fully leveraged people are more at risk for default.

You would just have to call around and ask HML's what their lending criteria is. For sure, it won't work for conventional financing as the downpayment can't be borrowed.

Good luck!

@Mateo Way  Yes, unfortunately all tax obligations have to be paid before they'll allow you to close.  Can you sell any personal assets?  Car, furniture, stocks?  Margin account against your stock portfolio?

@Gerardo Lewis  The collateral is the property you're buying.  If you have $100k of your own money to put into the deal and the lender finances the rest with a lien against the property, it shouldn't be too difficult to put together a deal.

@Grayson Grzybowski  I've done a number of deals where either I obtained seller financing, or got the funds from a friend on a short term basis.  The goal is to force appreciation from renovating the place, and then refinance through a bank quickly (6 - 12 months) to pay off the original loan.  That said, it isn't "no money down", there are always closing costs, reserves to finish the project in case it goes over budget, etc.

@Kerry Baird I have or have had Chase Ink, United and Southwest business cards, Citi business, and AMEX Marriott business.  None of them report to my personal credit.

Side note, I didn't have to do any of these steps you mentioned.  Just an application with my SSN and income on my business (rental income).

Citi and AMEX both gave instant approvals.  Chase generally makes me call in and give some details on the rental properties (how many, expected income and expenses, purpose of requesting another credit card).  Typically they then approve me while on the phone.

Hope that helps,

- Tom

@Juvenal Zendejo  I've done this successfully with a small local bank where they held the loan in-house (portfolio loan).  So you'll have to call around your area.

The key is that the bank wanted a 20% downpayment first (sourced from my 401k, did a 401k loan).  We closed, and then the seller executed a seller-carry back (2nd mortgage) for 15% of the purchase price.  I used that to repay my 401k loan, and effectively did the investment property purchase for 5% down.

It can be done, but there are lots of moving parts (bank willing to allow this, downpayment funds up front, seller willing to offer the 2nd position mortgage, good credit).   Hope that helps!

@Jorge Leon Curious, why would the church pay more than the appraised value?  I can't picture then putting in an extra $200k because the asking price is $200k over appraised value.  I'm assuming they they would negotiate so that the purchase and appraised are the same.  So that extra money shouldn't even come into the equation.

@Ingrid Bardales  In addition to the great advice posted above, get it appraised so you know you're not overpaying.  The seller won't require an appraisal like a bank does.

Most seller financing scenarios include a balloon payment, meaning you make the monthly payments for 5 or 7 years and the balance is due at that point.  Most sellers are unwilling or unable to hold the note for 30 years.  So if you overpay by even 10% in the beginning, and have to sell suddenly (change in life situation), you'd have to come up with a good amount of money to close, considering the costs to buy and sell a property.