If Seller Can't Take Back A 2nd..Now What?
How does this work when you can only get 65%LTV Funding and the seller can't take back a large 2nd? Is there a source for Funding 2nd's?
Help? Is there another technique?
Thanks Austin
Hi austin,
Tell us more details of the transaction, and what the sellers position it. We will be able to help you from there!
BAMZ
Seller can sell (at a discount) note & DT to a 3rd party investor. Could be your relative, friend, etc.
Details of the Deal Are:
Single Family Home
FMV at $179,000
I Have an Purchase Option at $149K
I can get 65% Financing
If execute the deal and offer the seller a note how would it have to be structured to make it attractive to him so he can sell it to a third party?
Find note buyers, ask their criteria, taylor note to fit.
Some buyers will pay face value for note. Some want 50% discount, some happy with 10% discount. I have traded my commission, 6% cash for a 10% Seller carry-back note.
Buyer may demand less of a discount if you guarantee the note.
For structuring notes for better value what has been your experience. Is it the Term, Seasoning, Rate or ? that make the Note more attractive.
What did you mean when you said if I "Guarantee the Note" the Home Seller would be more likely to do the deal? How do I Guarantee the Note?
Austin,
My second purchasers usually require 3 months seasoning, 8-9% interest, 1-5 years term. I don't know of any second buyers that will do a simultaneous close. I am still looking for one.
Best of Luck!
HAve Seller carry second and season for six months THEN have him sell the note.
C-
If you can qualify for higher LTV at a later time you might structure a short term note at high enough interest to close. You can refi to pay off the note when due. I would put some back-door clause in the note so you have the option of extending it a year if you need to and for this option you will pay a higher rate the last year.
Does seller need to sell note immediately?
I have bought Seller's Carryback notes right out of the closing escrow. Seller just gives Escrow officer instructions and assignment papers to note & DT.
Usually the Seller wants to see the Investor's cash in escrow before Seller signs off on everything and deal closes.
Just curious austinl why can you only get 65% LTV?
Seems no matter what the situation you should be able to get a higher % than this even if you just went through a banckruptcy last week.
(I'm not dealing with a Bank or Mortgage Company for the Financing because of the amount of time, documentation , lack of flexibility and FICO scoring requirements. It's coming from a Real Estate Investor friend of mine that will loan me the funds but only up to 65%. It's a higher interest rate and is basically used just to "tie-up" the property.)
I contacted several mortgage companies and they said I couldn't buy the property and then turn around and refinance the property? IS that true?
I'm looking at a multi-family property that is owner by an out-of-area owner.. If I buy it at only 85% of market value. Get the seller to take a short term note of 20% and my friend provides the other 65% ...is it possible to bundle the whole deal within 60 days or less and refinance in order to cash out the seller and my friend and take out 5% cash? That would leave 10% equity still in the property that is already paying for itself.
All the mortgage guys I have talked to said no? Is this true?
Quote:
On 2003-11-28 10:11, austinl wrote:
(I'm not dealing with a Bank or Mortgage Company for the Financing because of the amount of time, documentation , lack of flexibility and FICO scoring requirements. It's coming from a Real Estate Investor friend of mine that will loan me the funds but only up to 65%. It's a higher interest rate and is basically used just to "tie-up" the property.)
I contacted several mortgage companies and they said I couldn't buy the property and then turn around and refinance the property? IS that true?
I'm looking at a multi-family property that is owner by an out-of-area owner.. If I buy it at only 85% of market value. Get the seller to take a short term note of 20% and my friend provides the other 65% ...is it possible to bundle the whole deal within 60 days or less and refinance in order to cash out the seller and my friend and take out 5% cash? That would leave 10% equity still in the property that is already paying for itself.
All the mortgage guys I have talked to said no? Is this true?
Austin,
You may want to find another person who is experienced in real estate investing. Your state that one of your reasons for not wanting to go with a mortg broker is documentation and FICO score.
If your freind is telling you that you need these for a mort with a broker than he might not be the person you should be getting advice from. It is common knowledge that there are MANY no doc loans in which there is no credit or income check for higher than 65% LTV.
Perhaps he is looking out more for his interest than yours or perhaps it is just that he is ignorant of what is available to you.
You also say that he is loaning you 65% LTV at a higher interest rate. This is crazy. He has about zero rick and yet is charging you HIGHER than normal interest rate? Does not a make sense.
Just go to a Mort Broker and apply, just don't go to one who charges a fee to apply. You have nothing to lose and might be pleasantly suprised.
[ Edited by MrMike on Date 11/28/2003 ]
If you can get the property appraised at the 179k or even just 175k you should/may be able to get a loan for 85% of this figure (=149k). If credit is the problem, find someone to co-sign.
Unless you do some major repairs it will be difficult to refinance in less than a year.
Ron
From the Postings you have ample advice on what to do. You just have to deal with Mortgage Broker that is checked out. Also you are in an area where there are a vast amount of Private Lenders that you should be setting up to finance your ventures.
In the future until you have solved your credit problems creat an entity to take title a relative with good credit a Corp. or even an investment entity. Once having gained the property then the rest is just merchandising the property.
Your present Real Estate Lender is not good enough for your transactions. Too low and I think his costs too high.
Clean it up, this should just be one in a series.
Go for it. Lucius
Hi, Austin:
I suspect from your profile and this series of posts that you are a rehab/construction investor....the 65% investor loan you posted about would seem to be a form of hard money loan.
The discussion within the thread seems to move around a variety of possible options/ideas/strategies for financing/refinancing the property you're interested in acquiring, though doesn't seem to focus on a specific plan for you...
I'm a mortgage broker, and an investor myself....I focus on investor clients and claim several rehab investors in my client list....
I suggest that you need to find a mortgage broker who understands investing, acquisition and exit financing as well as strategies and issues attending both, who can and is willing to help you focus your finance strategies...
True, you're going to pay something for such a broker to help you, but if he/she is legitimate, trustworthy, knowledgeable in investment financing techniques and, most of all, is willing to work with you as a member of your 'team', the cost for his/her services may be WELL worth it.
Not all mortgage brokers are the same, so you'll want to check out a few in order to find out if they really understand your intentions/strategy......I would suggest that your first question when interviewing a broker is not "can I get a loan" or "what is the cost", but rather "what qualifies you to help me as an investor?--I can get ANY broker to put together an easy-to-do loan---what else do you bring to my team?"
I don't know if I can help you, but I'd certainly be willing to give you a call (yeah...and you can ask me those questions!) to see if I can get you on track, finance-wise, whether by conventional mortgage, hard money resources, secondary financing or structuring your acquistion ahead of time such that a note buyer is a good entry option (or, usually most effectively, a mixture of these types of financing to accomplish your deal.)
Send your contact info to me at **Please See My Profile** and I'll give you a call?
Good luck...
Mark
Great Advice...Thanks for the info'
I'll check out the No-Doc Loans which seems to be my best bet.
Thanks Again...