Posted by Alvin Hentrel on May 30, 2001 at 20:41:46:
Nate,
Can you imagine how this guy might feel if he got to closing and the lender killed the deal b/c the HUD1 shows a sizable amount of money going to him? Or, do you know of many banks who readily provide financing for assignment contracts, I’m starving for one…
Thanks.
Can Somebody - Please Show me the money? - Posted by Elton Allen
Posted by Elton Allen on May 09, 2001 at 14:54:17:
All,
I am still a new investor with VERY, VERY, bad credit (currently in bankruptcy) and NO MONEY (no job). I have been searching to find money in IL, with no success.
I have a property that has a FMV of 45k, apprasial is 50k. I have put it under contract for 30k, with the out clause of me being able to secure the 60% (30k)financing. With the seller paying all closing cost, any points, and fees.
I’ve tried to locate any - HARD MONEY lenders who will give me “easy” qualifying, with NO Income varification. I know that these programs are out there but it is like pulling teeth and worse.
I still have had absolutly no success. I am about out of options and have 20 days to come up with the money, or loose the deal. This is the third deal that I have been unable to find funding to buy. I do not want to get a reputation among fellow investors in my area that I put houses under contract and then walk away. This could be devistating to my investment career.
I live in SOUTHWESTERN ILLINOIS, NEAR ST. LOUIS, in a town called Fairview Heights. There are a MOUNTAIN of deals to be had here, but I do not have the monies to do the deals. And this is KILLING my confidence.
Can ANYBODY, show me the money? My family is hugry, we to keep our home and the rest of our possesions. Just looking for a little guidence. Thanks.
Elton
Re: Can Somebody - Please Show me the money? - Posted by Ed Garcia
Posted by Ed Garcia on May 10, 2001 at 01:28:20:
9 ways to do a deal with bad credit
Elton,
In my workshop, I teach that there are at least 9 different ways you can do a deal with poor or bad credit.
Now before I give them to you, I want you to know that I’m really supportive of learning deal structuring. The first thing you need to do is, “investigate your deal” to know what I call (where the bodies lie) another words what is the seller’s main objectives or motivation. That allows you to have an idea of what approaches are going to be compatible with the sellers needs, allowing you to do the deal.
Here are the 9 ways that I’ve mentioned.
(1) PARTNERHIP: Find a 50/50 partner. It don’t have to be 50/50, it can be what ever you can negotiate.
(2) FLIP: the best way to flip is to find a potential buyer first and then find a property. You can do this by running an ad on a property to see what kind of action you get. Once you have a potential qualified buyer, you’d be surprised how easy it is to find them a house.
(3) LEASE OPTION: Many times you can buy and sell with a lease option. We call this a “Sandwich Lease Option”. Jim, I’m not going to go into any great detail, you can find this information all over this forum.
(4) SELLER CARRY BACK: This is one of, if not my favorite ways to buy. Now the best way to utilize this system is to do a second seller carry back in order to give the seller some cash in the deal. If money doesn’t exchange hands, many times the seller doesn’t feel that they consummated a sale.
Example:
I find a house that has a small balance on the first. Lets say the house is worth a $100,000; the balance on the first mortgage is $30,000.
If I wanted to buy this house for lets say $80,000, I could ask the seller to carry back $15,000 and go to a hard money lender to borrow 65% of AMV (appraised market value) of which is $65,000 and the seller carrying $15,000 in second position, would ad up to $80,000. It would also give your seller $35,000 new cash, and $125.00 income on the $15,000 loan that they carried at 10% interest only, for 5 years.
(5) HARD MONEY: Hard money, is an equity loan made at approximately 65% LTV, based on the equity of the property only. Credit is not a consideration.
(6) HARD MONEY/SELLER CARRY BACK: Again, You can have the seller carry back a second and refinance the first, giving the seller some money. You can do variations of this system.
(7) SUB PRIME FINANCING: Many National lenders will provide financing at 70% with poor credit and won’t verify money down.
(8) SUB PRIME/ SELLER CARRY BACK: Again this combination can provide money to the seller, rather than ask them to carry the whole thing. Also there are local independent portfolio lenders that will lend as well as mortgage co’s and I always recommend seeking them out. National one’s would be Associates Finance, American General, Beneficial etc.
(9) CREAT YOUR OWN MORTGAGE: In our work shop, Terry Vaughan covers this, and shows you how to discount it and market it.
Elton, I hope this post is helpful to you and will encourage you to stay with it. The only way you won’t be successful in this business, is when you stop trying.
Ed Garcia
Re: Can Somebody - Please Show me the money? - Posted by Nate(DC)
Posted by Nate(DC) on May 09, 2001 at 16:05:15:
Elton,
What are you planning to do with this property? Are you going to flip it, or rent it out?
If you are about to lose your home and are in bankruptcy, I respectfully suggest that you should not plan on renting it out. By the time you start collecting rent, you may already be out on the street.
You need to make money FAST. So that means you flip it.
Rather than chasing a hard money lender, why not try to find someone who wants to buy the house and assign them your contract for a few thousand dollars. Then find another house, get it under contract, and do it again. You don’t ever own the house and have no need to worry about financing it.
It seems to me like with your situation, that might be a better idea.
Good luck!!
NHT
Ed Garcia: Cash back at closing? - Posted by Dave
Posted by Dave on June 21, 2001 at 01:00:46:
Ed,
I would like to get your opinion on getting cash back at closing. As you have described in #4 of your 9 ways to buy without credit qualifying, I have bought homes many times using this exact technique of buying using hard money (65% LTV) and then having the seller carry back a second for the remainder. Of course, this allows me to buy with no money down plus I don’t have to jump through a bunch of qualifying hoops.
Several times I have actually got cash back at closing. In your $100,000 home example, I would borrow $65,000 from a hard money lender and then have the seller carry back $25,000 (the purchase price is still $80,000). This will allow me to leave the closing table with $10,000 cash. If asked, I usually tell the lender/investor that I will be using the extra cash for rehab costs. A lot of times that is exactly why I do this; I get my rehab money up front (and some profit) and don’t have to use any of my personal funds. What are your thoughts on this process? Is it legal and/or ethical?
Since I’m not borrowing more than the appraised value and the lender is secured by the first deed of trust I’ve always thought everything should be fine. Does the seller need to know the amount of the first mortgage? Anyway…I would really appreciate your opinion on this cash back technique. Thank you, Dave