Money Back For A Fix Up
I have a property I am looking at that is listed at 45k but needs alot of work.
I think I can get it in the low 20's but would need 20k just to get it in shape for rental (then it would make some pretty good cash flow -- its two units and its a HUGE OLD HOUSE).
From listening to Real Estate programs I thought i could just offer like 40K and ask for 20K cash back at closing -- I tried this with my personal home and that banker said NO PROB. -- but the guy who is helping me at Wells Fargo said that it is VERY VERY GRAY area and he doesnt think it can be done or it is kind of illegal.
CAN SOMEONE CLUE ME IN ON HOW I DO THIS?
I have heard that a construction loan might be the way to go, but I was hoping to be able to alot the 20k anyway I wanted ((IE pay my brother in law some cash so he can quit his job and work on this house 24/7))
ANY HELP GUYS????
Thanks,
Todd.
anybody???
This is totally legal, I do it ALL the time with many different lenders. Tell your Wells Fargo guy to get with the program.
I use Washington Mutual and a local bank mostly, both will go 80% of APPRAISED value. To do it this way you have to have the cash up front for the rehab and then get your money out at the finance or refinance.
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Hope this Helps!
Bill[ Edited by telemon on Date 04/20/2004 ]
THANKS!
So lets say I need the 15k to fix up the place and pay someone to do it.....
I have to have the 15k in the bank or on credit somewhere first? Then the guy can cut me a check at closing?
And this is in addition to the down payment?
I sold a rehab I was working on (closed this afternoon) a partner and I bought it for 21K - we opened a 30K line of credit with American General at 8.25% and borrowed as we went. Total rehab time was: 7 months and total cost: 26, 500+/- and we closed today at $41K.
A line of credit may be an option.
Im mid 6's,is this kosher???
awesome guys thanks!!!
we do construction loans at 80-95% arv appraisal or as-is..i mean we get the loans on these terms all the time. not every lender will do it and we spread it around to many different programs, but cash out at closing for the rehab, down payment and closing works..the rehab goes to escrow and we write checks out of it..you can always do a double close with your partner as well..
regards-pat
whats a double close?
A credit for repairs back at closing for repairs is a possible way as well..