Downpayment Blues - Posted by Maui Greg

Real Estate Investing Real Estate Financing
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Posted by Maui Greg on April 25, 2001 at 02:43:53:

Thanks for the quick response Ed. I’ve still got a lot to learn about creative financing. Do you and Terry still have room in your Lenders Workshop on June 1,2 & 3 in Atlanta?

Greg

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Downpayment Blues - Posted by Maui Greg

Posted by Maui Greg on April 23, 2001 at 23:44:06:

Aloha Ed and everyone,
I am finding some really good deals (65-75% below market value) via realtors in my area, but I don’t have much in the way of downpayment cash. I have two questions about purchasing these properties w/ OPM.

  1. Can I legitimately purchase a property with a conventional loan, and in the same close, sell the property OWC with a wrap-around mortgage using my new buyers downpayment as my own?

  2. Can I get a hard money loan to puchase a property 100% and then turn right around and refinance it with a conventional mortgage after I close escrow?

Thanks for you help.

Greg on Maui

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Re: Downpayment Blues - Posted by Ronald * Starr

Posted by Ronald * Starr on April 26, 2001 at 21:39:43:

Maui Greg---------

Did you mean to say “at 65-75% of market value” or what you wrote: “67-75% below market value” which I calculate to mean 100%-65% = 35% of market value or 100%-75% = 25% of market value? If you meant the former, good going guy! If you meant the latter, please book me a motel room nearby for next weekend, I want in on these kinds of deals!!!

Good InvestingRon Starr****

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Re: Downpayment Blues - Posted by Ed Garcia

Posted by Ed Garcia on April 25, 2001 at 01:16:00:

Aloha Maui Greg,

Welcome, and let me see if I can shine a little light on your questions today.

Greg, your first question is,

  1. Can I legitimately purchase a property with a conventional loan, and in the same close, sell the property OWC with a wrap-around mortgage using my new buyers down payment as my own?

Answer:

The part of your question that sticks out is when you say “LEGITIMATELY”. That makes me have to tell you NO. The manner that you have chosen is to deceive the lender into thinking that the down payment came from you.

Greg, what you can do is, do your deal with a Hard Money Lender, telling them in front, that you’re selling the property to your potential buyer and want them to finance that buyer. You can then take your buyers money down, and carry a second for the difference.

Next,

  1. Can I get a hard money loan to purchase a property 100% and then turn right around and refinance it with a conventional mortgage after I close escrow?

Answer:

You can if you can find a conventional lender that will do it for you. I think what you want to do, which you didn’t say is, you want to pull cash out when doing the refi. If that’s the case, the lender will detect that you lack SEASONING, and will view the property to have no equity. If you wanted to do a rate reduction refi, you would have no problem as long as you qualified.

Aloha,

Ed Garcia