I am doing a similar deal now with wells fargo. The duplex was for sale at 42k. we looked at it and determined it needed about 16k in in repairs or upgrades. so we made the offer for 58k and the seller to give us 16k in a repair allowance. wells agreed but they will hold the money in escrow until the repairs or upgrades are done. then they will write a check directly to the person who did the work. some lenders wont do that at all, some will do it differently, depends on who you use.
Exactly my point asking on a open discussion board and then picking from column A, B, or C is very dangerous, when the correct answer is check with your attorney or title company to see if this can be done legally.
You may call it mis-leading I call it a wake up call for those that feel they have done it their way and nothing has happened..
If you are treating this as a loan. You need to do it out side of closing... With the seller being in 2nd position on title!! Have the seller write you a check outside of closing.....with a note to hold against property with a balloon in 2 years. As long as you have it in writing and he has it recorded at court house it is legal...
hlprops is absolutely right about the $50K loan. If the guy selling the house to you wants to loan you money on an unrelated real estate deal, it has nothing to do with the closing of the home you are buying from him. He is just loaning you the money from the surplus he is receiving from his sale.
The house you are rehabbing can easily be 2nd mortgages to this "interested invester" at terms that are worked out and not usuary. It has nothing to do with the closing on the first property and should be handled separately. Write up the investment contract and 2nd mortgage a day or two before and say funds to be paid within so many hours. He pays you, who cares from what pot of money, and you initiate the private loan with the house being rehabbed as collateral by way of 2nd mortgage.
Ok you gurrus and pros you can set me straight on this... but I just got to put my 2 cents in
If the need for money back is for rehab it seems to me then all you would need to do is stipulate in the contract the repairs be made as part of the deal..... wouldnt this work?
Example on small scale;
Asking price $100,000
Repairs needed $5000.00
You find in your negotiating seller is willing to drop 5000 or sell price to 95,000
Couldnt in this example simply pay the 100,000 but stipulate instead that sale is subject to repairs or contengent on repairs be made by seller in due course?
This seems honest and above board... wouldnt it be?
However, I think the example of using hard money for purchase and repairs then doing a cashout refi seems the way to go...
I am doing a similar deal now with wells fargo. The duplex was for sale at 42k. we looked at it and determined it needed about 16k in in repairs or upgrades. so we made the offer for 58k and the seller to give us 16k in a repair allowance. wells agreed but they will hold the money in escrow until the repairs or upgrades are done. then they will write a check directly to the person who did the work. some lenders wont do that at all, some will do it differently, depends on who you use.
Where can I find more info on this topic?
Thanks
hlprops,
Glad to meet you.
Exactly my point asking on a open discussion board and then picking from column A, B, or C is very dangerous, when the correct answer is check with your attorney or title company to see if this can be done legally.
You may call it mis-leading I call it a wake up call for those that feel they have done it their way and nothing has happened..
John $Cash$ Locke
[addsig]
If you are treating this as a loan. You need to do it out side of closing... With the seller being in 2nd position on title!! Have the seller write you a check outside of closing.....with a note to hold against property with a balloon in 2 years. As long as you have it in writing and he has it recorded at court house it is legal...
hlprops is absolutely right about the $50K loan. If the guy selling the house to you wants to loan you money on an unrelated real estate deal, it has nothing to do with the closing of the home you are buying from him. He is just loaning you the money from the surplus he is receiving from his sale.
The house you are rehabbing can easily be 2nd mortgages to this "interested invester" at terms that are worked out and not usuary. It has nothing to do with the closing on the first property and should be handled separately. Write up the investment contract and 2nd mortgage a day or two before and say funds to be paid within so many hours. He pays you, who cares from what pot of money, and you initiate the private loan with the house being rehabbed as collateral by way of 2nd mortgage.
ok can I join in even though I am just a MH guy
Ok you gurrus and pros you can set me straight on this... but I just got to put my 2 cents in
If the need for money back is for rehab it seems to me then all you would need to do is stipulate in the contract the repairs be made as part of the deal..... wouldnt this work?
Example on small scale;
Asking price $100,000
Repairs needed $5000.00
You find in your negotiating seller is willing to drop 5000 or sell price to 95,000
Couldnt in this example simply pay the 100,000 but stipulate instead that sale is subject to repairs or contengent on repairs be made by seller in due course?
This seems honest and above board... wouldnt it be?
However, I think the example of using hard money for purchase and repairs then doing a cashout refi seems the way to go...
Oh well, just 2 cents
MarkB