Investment Idea But Not Sure If Doable??
Hello all,
My mother sells homes for a builder and she is about to sell the model which is in an ideal location. It has all the upgrades and everyone wants it. She can get it way undervalue for around $306,000. I am currently renting and wanted to buy but my situation is quite bizarre. Currently I am living off of natural gas royalties and going to school fulltime. So my only source of income is my royalties. I made $40k+ last year but have no idea if I would qualify for a loan. There is a chance my mother could cosign with me. Is their any chance I could pull this off. Even if I flip it I would make a ton of money considering how badly people want this property. Any ideas would be greatly appreciated and I know you will probably require more details so ask away and I will try to help out with additional info. thanks in advance
R.B[ Edited by paleoman on Date 02/16/2004 ]
Lease option that baby - then you have controll and time to sell at the BEST possible price. Have fun w/ the $$.
thanks, can you elaborate on that. I am totally new at REI. How could I do this in my particular situation?
A lease option is when you lock in the current asking price while making lease payments - essentially you don't own the building but you have controll and right of sale - read the MSI ebook in the freebies for more info. If you get the contract make sure you can sublease and advertize the property as a rent to own (30% of rent tword purchase price ask about 2% maybe for the lessor to purchase an option from you at a much higher amount). Make sure you check the credit and refrences of a person who may rent to buy from you. Ove course since you have the option you can start advertizing the minute you have this contract for the sale and take whatever off the top of your sale.
Hi,
If you decided that you wanted to go ahead and purchase this nice sounding deal, I could try (or any good mortgage broker for that matter) to arrange financing for you on a stated income or no ratio basis. It would help if you happen to be in NJ, NY, CT or FL! Feel free to PM me.
Simon Burgess
Senior Loan Officer / REI
I doubt that a builder will agree to a lease option, but it is worth a try. Otherwise, sit down with a mortgage broker and see what he says about your ability to qualify either with or without your mother cosigning. Then have an appraisal so that you know if the house is really undervalued at $306k. I have been doing this awhile and still have a hard time determining Fair Market Value (FMV). Even with the appraisal, there are many things that could affect the value of the home down the road: local economy, new homes being built close by, etc. then do some research as to the appreciation of homes in your area. The past does not predict the future but it is the only tool that we have to forecast the future. If you can qualify then do a realistic assestment of the costs: taxes, insurance, yard, home owners, power, phone, cable, water, etc. Come up with a plan as to how you will get the money to pay the bills.
If it all looks good then go for it.
Brenda
Thanks for the replies. I spoke with my Mother and she informed me they def do not do lease options. We are going to meet with their broker to see what options I have. I am kind of doubting I could pull it off since they require a 10% downpayment which would be around 30k. Unfortunately I only have about 10k saved. I will be receiving about another 20k or so in the next few months for some farmland our family is selling but this deal will be gone by then. So perhaps I should wait till I have that money and pursue another deal. what would you guys do if you had 30K to start in REI in Northern NJ?
They may finance the extra 20k for the downpayment but you will find that you have to pay insurance on this. I don't know if you were to produce the paperwork for a pending sale or ad's to prove that eventually you could have the dowpayment paid in full would help or not but it's worth a try.
10%? not for a first time buyer. You could get away with 5%, or maybe even 3% down. Just look around for the first time buyers program. But beware, many will tell you, that you need no money down. Don't do that. They just give you two mortgages, and its not worth it. Tell them you want to put down 5-10k,, for a loan of 306k for a house that is worth more.
hi RB - although it may appear to be a potentially profitable endeavor, i would advise you to seek a more conservative and managable property. Your exposure on a month to month basis will eat into pocket rather quickly since closing delays are highly likely on an sfr. I am a mortgage banker and suggest you prepare to invest by doing some purchase and hold scenarios. This will tell you what you can afford. I am located in Morris county NJ and have some familiarity with the market as well. most of the loan products are credit driven so you should know where you stand there as well. -mn
Do you have to use "their broker"? Can you not come to closing with your own mortgage broker. There are many loans out there that require much less than 10% down.
I am not entirely sure if I have to use their broker. I will find out on friday. I seriously doubt I will be able to borrow that much money given my situation but I am still going to check it out. Maybe it would be better to wait till I have this additional money and then find a property. I was thinking perhaps a duplex or multi-unit to start, there are many in NNJ.