Posted by jorge on February 28, 2004 at 10:03:25:
I already have a lender that says they can do it if it appraises. We will do a double close with the “corporation” and the seller. So my lender will give the corp a check and the “corp” will give it to the seller.
SO seasoning is NOT an issue for the subprime lender I am going to use.
So other than that you think we should be ok?
Thanks
JC
double closing with corporation. - Posted by JC
Posted by JC on February 28, 2004 at 01:25:08:
Ok, I just had someone give me a suggestion about this deal.
Arv on a proerty is 185-195k
And investor is doing a short sale from the bank.
He wants to sell it for 155k.
Needs paint and carpet and a few minor fixups. Maybe 5k to fix everything.
I want to buy it for 150k and lease option it for 190k. Here is the suggestion I got.
Create a corporation to buy the property from seller for 150k.
Have me buy it from the corporation for $187k getting a 80% Ltv ($150k) 3 yr arm @ 4% interest rate or $716/mo having the corporation carry 15% or $37k with no payments for 2 yrs on that. Put down 5% or $9750 that is going to the corporation which I own.(So it goes from my left pocket to my right pocket.)
Then lease option it to tenant buyer for 195k with $5k option money (which covers the fixup costs) and $1300/mo
So now I have about $600 a month cash flow and when they excercise their option in about 18 months I will get $185k making it a $35k profit plus $10800 in monthly cash flow.
Does any of this make sense? Any suggestions?
Please let me know.
Any Tax implications.?
THe Main challenge is to get the appraisal to come in at 187. I ran comps and in the last 5 months there has been 4 houses exact size and style sell for 187k, 207k, 185k, 189k.
And since it only needs carpet and paint, I might be able to have the appraisal use that in his appraisal.
Thank you,
JC
Re: double closing with corporation. - Posted by Randy (SD)
Posted by Randy (SD) on February 28, 2004 at 09:50:02:
Jorge, the appraisal is probably not your biggest challenge ? it?s right in line with the comps so with a sales contract between the corp. and you at $187k it a walk in the park. BUT getting a lender to finance it is another story, how are you going to deal with the seasoning issue? The corporation can?t get a mortgage loan to buy it. The corporation is not on title so ?it? can?t sell the property to you. Unless your lender doesn?t have a issue with seasoning.