HUD Purchase As Owner Occ. For My Primary Residence
I am looking to by myself a HUD home as my primary residence. I currently own a duplex in which I currently live in one side. I am looking for some feedback to the plan I have. Suppose I find a deal on a HUD that is listed for 50% of Market Value (ex. 160K listed for 80K) House would need 25K-35K in improvements to get it in condition to sell for the 160K (but I will not be selling it for the next 2 years). My Plan, make sure the house can get appraised for the 160K after improvements. I figure 160K - 20%=128K (after refinancing I wanna be 80LTV so no PMI). I now take the 128K-35K(improvements)=93K. This 93K is the max I want my bid to be. Does this seem correct? It would seem to me that my profit would be the 32K in equity staying in the house. A few questions I have are
1) When the appraisal is done for the 1st loan, if it would happen to come in low because of the houses condition (ex.120K) will it be hard for me to turn around and refinance it for 128K assuming a new appraisal of 160K? My actual intentions are to get the house in livable condition and continue to do work myself over the next few years (On the side I do remodels etc.) So how much proof do you think a lender will need to justify an increased appraisal?
2) If it appraises at 160K from the get go what do you think my chances are the bank will lend me the 128K to purchace the home for 93K and have the remaining 35K for improvements?
3) Assuming I cannot get the bank to finance improvements I plan on borrowing the money from family with the intentions to cash them out + some profit when I refinance.
4) Any other ideas?
Thanks
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