Thanks Nate. But I’m not sure that will work in this scenario. We’re getting the REO from an exclusive Realtor that will only deal with Investors who pay cash (this is an unofficial rule of theirs). I don’t think I’ll be able to slide my cousin in as a FHA buyer at this time. According to my contract for the REO, I have to close by May 15th. I don’t even think my cousin’s FHA will close by then. But here’s an update on the situation:
Talked to the loan afficer who says that since we’re purchasing with all cash and not a mortgage, she can start the paperwork and get the ball rolling. She hopes to have everything finalized right after we close.
I just got under contract for a 3 fam REO for $72k cash. My cousin, a contractor, looked at it over the weekend. He reported that it only needed paint, new flooring, walls plastered and viny siding. I was going to have him work on it but he surpised me by coming to me later saying that he wants to buy it for $100k. His plan is to fix it up, live in one of the apartments, and rent out the other two. He’s been preapproved for $120k FHA and needs to be able to move in soon.
My concern is that I just got under contract and don’t own it yet. I was ready to do a double closing but my cousin tells me that his loan officer at Wells Fargo wants us to own the house first before she starts on his paperwork. My Brother and partner says that we need to take control and get the ball rolling now. How do we do this? How do we communicate with this loan officer that we need to get started with eveything now. I haven’t talked to her yet but will soon.
Confer back with your Loan Officer that you want to do a land contract for the property. FHA requires no seasoning on Land Contracts, which means you can refinance the next day and sell to your brother. Or, assign your position to your brother at $72K have him land contract it and refinance for 100K and pay you the difference. I have done deals like this with nonconforming lenders because they seem to know where to send a deal that requires no seasoning, then after six months, refinance the property conforming at a lower rate (12 months for FHA). Well, there’s my input, hope it gets your creative juices flowing. Hope you get more ideas.
I want to give a little clarification and then follow up with a few questions.
(1) My Brother is my business partner and we as a company (LLC) will be selling to my cousin.
(2) We will be purchasing the property with all cash. It’s my cousin who’s been preapproved with the FHA mortgage and wants me to contact his loan officer at Wells Fargo about selling the property to him.
Now having said that, you’re saying that I can do a land contract on this property? At what point is this done? Can the process be started while I’m under contract to buy the property? I’m going to research this board for more posts and articles on land contracts. Any additional information you may have is appreciated. Thanks again.