cash at - Posted by sam

Posted by JohnBoy on June 20, 2001 at 13:56:41:


You must of misunderstood me. This was a pre-foreclosure, not a bank owned property.

The bank didn’t need me for 2 hours. This deal was basically handed to me from a mortgage broker friend of mine. The owner was in foreclosure. The owner called my friend the mortgage broker to see about getting a loan to cure his foreclosure. The mortgage broker couldn’t get him approved through anyone. The mortgage broker then called me after he wasn’t able to get the owner financing. The mortgage broker was considering doing the deal himself, but he never did an investment property before. He only brokered loans. He said the guy will just deed the thing over to prevent the foreclosure. The guy was over 6 payments behind, plus late fees, attorney fees, back taxes and a city lien. The mortgage broker could have gotten a new loan on his own, but the best he could find was having to put 5% down, which he didn’t want to do. He was also worried about getting stuck with eating the mortgage payment if the property was to ever become vacant or he needed to evict someone. Being his first deal he was facing some fear of doing this.

He calls me because he knew I did deals and wanted to know how he could get this thing without having to come up with the money to reinstate the loan or put 5% down by getting a new loan. Then he asked me if I would partner on the deal because he would feel better having someone to split expenses if the property was to ever become vacant. Naturally, I said yes! For $34k instant equity? You bet!

I had a lender that I worked with through a local branch. So I told my friend I think I can get this thing refinanced if we take title and record the deed in our name. Before we did this I first wanted to see the property. My friend also wanted me to meet the seller. Part of the deal for this guy to just deed over the house and give up all his equity was if he could remain living in the property. I didn’t want this guy involved once he deeded it over to us. I wanted the seller distanced from the deal as much as possible to prevent any potential problems later on where he might start crying we took advantage of him. So we L/O’d the property to his son instead.

Before we recorded anything I went to see my lender first and explained what we were wanting to do and get pre-approval before taking title to the property. My lender said no problem! We’ll refi you for 80% of the appraisal!

My friend had already pulled title and had an appraisal done because he was trying to get the guy refinanced and was considering the deal on his own. My lender wanted to have their own appraisal done. No problem! We got approved, recorded the deed, my lender then ordered appraisal and we closed within two weeks!

It wasn’t the seller’s lender that we dealt with! I used my own lender to get refinanced once we took title in our name. They had no problem with seasoning. They had no problem with us getting cash out. They would loan up to 80% LTV of their appraisal!

The property appraised at $100k. We refinanced for $80k. The pay off on the underlying loan and liens, plus our costs for appraisal and title, came to $66k. My lender cut a check to pay off the defaulted loan and we walked out with a check for $14k. We still had 20% equity left in the property which was $20k. The house will appraise for $118k if we put about $5k of work into it, adding another $13k in profit!

The people that lived in it were slobs and since they were staying in the property we haven’t done anything to it since! It’s been about a year and a half or more and so far they have paid on time every month. The sad thing is the original payment the owner had was only $650. Now they just rent it from us for $950! We get $50 a month in cash flow after covering our mortgage payment.

So the 2 hours wasn’t dealing with the seller’s lender. That was the time it took to go see the property, go see my lender and get pre-approval before recording the deed and then going down to record the deed.

So basically, all we did was get approved for a non-seasoned, cash out, non-owner occ., refi at 80% LTV of appraised value. To qualify we had to be on title as the legal owner of the property! Once recorded the deed we were home free, subject to the appraisal of course. But we already had one appraisal done and knew we were in good shape there. At worst, we may of had to accept less cash at closing if the appraisal came in lower!

I also knew of another guy that buying properties the same way through Bank One. He would get the sellers to deed the property to him and then he would turn around and refinance it, pay off the sellers underlying loan, pay the seller for any equity if they had anything coming, and he would end up owning the property with new financing in his name! Basically, these were just non-seasoned refi loans.

This is probably a lot harder to find today with all the seasoning requirements going on with these lenders because of all the lender fraud going on around the country, but a year and a half ago this wasn’t a problem for some lenders. You might find a local lender that holds their own paper be willing to do this if you have a good relationship with them. Otherwise it’s probably pretty much non-existant today.

Does that clear things up now?

cash at closing…how? - Posted by sam

Posted by sam on June 11, 2001 at 17:50:10:

Has anyone here ever gotten cash at closing? How does this work? It has been my experience that when I pay say 50k cash for a house that comps at say 80k, the bankers will only loan me what I paid for the house. What am I doing wrong? Some people tell me cash at closing is pure “seminar” BS.

Like this - Posted by Terry Heilman

Posted by Terry Heilman on June 19, 2001 at 16:27:23:

Bought a duplex for $14,000 that appraised for $26,000. Lender gave me $19,000 the seller gave me a second mortgage for $2,800 (lender knew about second mtg). Refinanced after putting on roof, interior paint, carpet, doors. New appraisal at $39,000 financed $30,000 and cash flows every month. This was not my first deal and the bank knew what I would do because I showed them the plan and future cash flows. Not all banks will do this.

The general pattern is this:

  1. Find a below market deal
  2. Get a repair credit and or second mtg from the seller.
  3. Finance it at the market value or use a line of credit.
  4. Improve the property value
  5. Refinance and get money out of the deal (make sure it cash flows)

Re: cash at closing…how? - Posted by Donna, ATL

Posted by Donna, ATL on June 16, 2001 at 13:25:36:

Most cash at closing comes from financing. It is not really net profit, but rather a loan, in that you are getting cash out of the loan at closing, but ultimately it has to be paid back. ex: purch price $100K, but the property is worth $125K. Bank will finance $115 of value, seller gets $100K you get a ck for the 15K at closing, but it still has to be repaid. There are numerous scenarios that can lead to cash back, but most are related to cash out financing and as such are not true cash profits until the loan is paid off.

go to the main newsgruop ask this questoin… - Posted by evelyn

Posted by evelyn on June 13, 2001 at 21:45:00:

or better yet, ready some of the success stories, and search the archives for cash back at closing. I asked about that over a month ago and got tons of responses.

Stop listening to the naysayers!!!


a sheets scam in my opinion - Posted by donny

Posted by donny on June 12, 2001 at 12:01:37:

there is no such thing just as you said. they few people that do get it are claiming they paid more than they did. thhis is fraud.

Oh, and the Carleton Sheets “cash at closing” is the security deposit of the renters. This is money you should not spend. In fact, in some states it is illegal to spend it.

Re: Like this - Posted by Dave TX

Posted by Dave TX on June 29, 2001 at 12:12:43:

I found a below market deal. Paid cash. Went to the bank to get a mort. They would only loan me what I paid for it minus 20 percent so I would not have the mort. insurance each month. In other words, the same thing that happened to the other guy. PS I have great credit and a long history of being an investor.

Re: cash at closing…seminar talk - Posted by sam

Posted by sam on June 17, 2001 at 12:26:59:

I tried that. I bought a house for 75k. It was worth over 100k. I paid cash, then went to the bank to refi. They would only loan me what I paid for the house minus a down payment. Don’t tell me I went to the wrong bank because I went to all of them. The only way to get the profit out was to sell it. Banks will not loan you more than you paid, period. Unless you can give me the name and number of a loan officer, I say this is just seminar talk!

Re: a sheets scam in my opinion - Posted by joel

Posted by joel on June 14, 2001 at 12:36:31:

Donny, or should I say Dummy,

You are wrong. I have done it. I made a full offer to the seller, the seller accepted. At inspection, we found things that needed fixing, so we asked for cash back. At the closing table, we got $2,500 back. Do you understand that we walked away with MORE money than when we woke up that morning. Please tell me how that (This is only one of MANY LEGAL Methods) is illegal, Donny.


Re: cash at closing (Bank gave you a 75%LTV) - Posted by Harvey Carroll, Jr.

Posted by Harvey Carroll, Jr. on June 21, 2001 at 21:47:31:

You may have paid cash; however, you got a loan to value of about 75%. Sometimes a bank will go a bit more, but tough in convential cases. 30 year loans and the like require less and can get a higher LTV sometimes 95% or more depending on credit history; however, most banks are not stupid and are not going to put themselves at risk. I agree with the siminar talk; however, there is the potential deals to walk with cash, but they are rare. I’ve never found one.

Re: cash at closing…seminar talk - Posted by JohnBoy

Posted by JohnBoy on June 18, 2001 at 12:37:43:

I did this. Took a house by way of quit claim deed that was in foreclosure. The total pay off on the underlying loan and all liens came to $66k. The house appraised “as is” for $100k. The lender loaned me $80k, paid off the underlying loan and liens, then cut me a check for $14k!

I set all this up with the lender BEFORE I recorded the quit claim deed. The lender had their own appraisal done. They had no problem with me getting cash out and doing a non-season refi once I took title in my name. No money out of my pocket except for $32 in recording fees to record a quit claim and warranty deed. Got the house, walked away with a $14k check and $20k in equity!

This was over a year ago and I know lenders have tightened up since then when dealing with investors. This wasn’t just any bank either. I went through B, C Lender that held their own paper. It was through Associates. Even as an A borrower the best rate they would give was 10% on a 30 year fixed! But who cares??? The cash and equity was there, the property still cash flows!!! I was happy, the lender was happy and the seller was happy to keep from losing his house to a foreclosure!

Re: cash at closing…seminar talk - Posted by Jason

Posted by Jason on June 17, 2001 at 20:51:27:

The only way I have heard of a large sum of monry taken out of a property was someone who bought did some work and did a refi in six months. Payoff was twenty thou. I understand your frustration.

Re: cash at closing…seminar talk - Posted by reenee

Posted by reenee on June 17, 2001 at 13:45:57:


I agree, to me banks make it hard for investors. I have yet to find one bendable enough to make a transaction seem feasible. You basically have to look for seller financing, or lease option. And sometimes they are far and few between.

Re: a sheets scam in my opinion - Posted by dummy

Posted by dummy on June 21, 2001 at 12:34:01:

How much did you put down? Was it ZERO ? I doubt it.

Re: cash at closing…seminar talk - Posted by Jason

Posted by Jason on June 18, 2001 at 21:38:11:

I was curious as to how you found your foreclosure? Have you tried the Goldenfeather web site. Can you explain your process in detail it sounds like a great success story.

Re: cash at closing…seminar talk - Posted by clyde

Posted by clyde on June 18, 2001 at 11:37:48:

This is an option for me in the future. This makes me mad. What would the bank do if I bought a house for ONE dollar? Would they just loan me one dollar? Or would they run the comps, determine the value and give me a loan. This is frustrating to me.

Re: a sheets scam in my opinion - Posted by Brian

Posted by Brian on June 21, 2001 at 15:20:18:

His name (dummy) says it all.

Re: cash at closing…seminar talk - Posted by JohnBoy

Posted by JohnBoy on June 18, 2001 at 22:00:42:

This particular deal was just handed to me on a silver platter!!!

I got it through a mortgage broker. The seller dealt with him trying to get refinanced to bail himself out of the foreclosure. No one would touch the guy! The mortgage broker never did any real estate deals himself and knew I did. He called me and asked how we could pull this off. Since he basically had the deal we partnered on it. My knowledge and a lender I worked through. It was really a sweet deal for me! Total time invested was about 2 hours! That’s $20k equity and $14k cash for 2 hours work! That’s only about $17k per hour we got paid! Not bad for a couple hours work, huh? How many hours, days, weeks, months, would the average person have to work at their job to make $34k, PLUS, have an on going cash flow coming in every month plus future appreciation on the property, plus additional equity build up through the principle being paid down on the loan every month that someone else is paying for you???

With the right kind of deals it doesn’t take many to replace a years salary!

Would a deal like this be worth beating down many doors over 2 - 4 months to get??? Multiply that by 3 - 4 per year and compare that with the salary earned working the 9 - 5 job!

Re: cash at closing…seminar talk - Posted by Jason

Posted by Jason on June 18, 2001 at 21:41:09:

There is more to it then paying a dollar. I am frustrated too. Keep reading books and do your homework, I am getting closer. Good Luck

Re: cash at closing…seminar talk - Posted by rotflmao man

Posted by rotflmao man on June 25, 2001 at 16:13:32:

yeah, so…what about the Southfield Michigan property??? Are you implying that it is “the” house you and your partner own and made 34k on in 2 hours?

Speak plain english, I am tired of this.