All Forum Posts by: Tom S.

@Logan Lehmkuhl  Be sure to check that ultimately the seller can do this - still have the loan in her name.  The seller's attorney is saying she has to sell the house (can't have the loan in her name anymore, for whatever reason).  So in addition to making sure this is a deal for you, make sure the seller's attorney will  allow it.  If not, you could be wasting your time.

@Lisa Sluss  Have you looked into personal loans at all for the cash to finish rehab?  I've used both SoFi and Discover loans in the past, both offered up to $50k.  I personally went with Discover, quick application and approval and funds in my bank account within about 2 business days!  No fees or pre-pay penalties at all, only downside was the rate at about 12%.  But if you finish quickly, you won't pay too much in interest.  So just posting my personal experience in a situation like yours.

Good luck!

@Robert P.  As others mentioned above, I work a lot with local banks that know the area and often the property.  You can also get referrals from the RE agent on their "go to" lender.

Keep in mind as you expand to multi-family, up to 4 units is residential financing and 5+ is commercial. So be sure to speak to the commercial lending department if you're pursuing the bigger units.

Good luck!

@Paul M.  Not just in the 70's, but this was also widespread in the 2008 house crash.  Short sales were common, where the bank would accept less than the principal owed.

@Apsu Hamilton  I'm pretty impressed that you can do a $135k rehab in as short as 4 weeks, and 8 weeks at the most.  I found that even getting an inspector for the lender to come out, sign off, and get a draw can take a week.

That said, your numbers look good and congrats on finding a nice deal!

@Carissa Mennen  Congrats on finding a potential deal. especially one next door so you know the area well already!

If the owner can do owner financing, just come up with some terms that you both agree to (downpayment, interest rate, balloon payment, etc).  You can then have an attorney draft it up as a formal contract.  I've done a number of deals as a buyer and that's usually how we arrived at it.

Of course, you also need to see if the owner can do the financing.  If there's still a balance on the mortgage, then that will have to be addressed in order to get clean title. Or the seller might need the funds for something else. 

Good luck!

@Joyce D Raphael I did a similar deal years and went to a local bank and got a commercial loan. 20% down on the purchase price and they provided the remaining purchase + rehab funds up to 75% ARV. What's nice is that they do the appraisal in advance, so you know what the numbers will be and the funds you'll have.

Bank interest rates and not HML rates.

So something to keep in mind as an option. Good luck!

@Clint Vonburg  Agree with the above, very expensive way to go.  Best if you can do it short term, one of the "0% interest for one year" deals and use a balance transfer check (although they still charge 3% of the amount transferred).

There are others ways to get cash off the cards like Paypal or Venmo off a credit card, but again, lots of fees.

@Bryan Field  As others noted, when you factor in all the other expenses (taxes, ins, maint, etc), this deal is very likely cash flow negative.

If you were able to negotiate better terms and have this to be CF positive, the main thing to add is I would remove the pre-pay penalty.  No reason for that. 

@Cameron Johnson Keep shopping around. I did a smaller rehab some time ago, $50k purchase and $30k rehab. Went to a small local bank that offered to loan 80% of ARV, and we did the appraisal in advance which came back at $110k. So they would fund $88k toward purchase + rehab. They required 20% down on the purchase ($10k), so their loan covered all rehab.