Posted by michaela-ATL on April 08, 2008 at 18:34:40:
If you haven’t ahd any problems, then great. I would think though that especially after all the mortgage crap last year it would be harder. Maybe not.
Michaela
How would you handle this purchase/junker? - Posted by Where do I put it?
Posted by Where do I put it? on April 08, 2008 at 13:08:13:
I’m buy a property I am thinking about using private money to purchase. Two quick questions:
- Are lenders shying away from refi’ing out of private money loans? I had one lender tell me they don’t like to refi investment properties off private money loans. That was only one however.
(Aside: I have the cash to buy and fix myself, but not sure what to do. Purchase price is $28K and it needs $4K worth of work to be rented out. I’m going to hold for three years and sell. Private money would cost me $1,200 in upfront fees, which I could save if I did this myself. Stuck on what to do.)
- How are you guys holding title to these properties? Again, I’m buying and holding. I have an LLC created that is my real estate business. Should I hold there or do it in a land trust?
Thanks for the help.
Re: How would you handle this purchase/junker? - Posted by IB (NJ)
Posted by IB (NJ) on April 08, 2008 at 20:00:09:
It makes sense to use private money IF you plan on putting some (or all) of your remaining cash in other investments. If not, and the cash you don’t use (as a result of using a private lender) will just be sitting there and not even looking for a temporary home (i.e. other investment property) then you may as well use it instead of the private money. My opinion anyway.
Ib
Re: How would you handle this purchase/junker? - Posted by Chad (MD)
Posted by Chad (MD) on April 08, 2008 at 18:37:22:
Where Do I Put It,
If you have cash why would you use private money? Is your cash earning a higher return than the HML will cost? You mentioned $1,200 up front, plus you probably high interest-only payments until you refi.
Also, I agree with Michaela; I have never seen a house that only needed $4k. Where did you get your numbers? Please make sure they are correct. What is the ARV? Most rentals in that price range need at least painting and carpet. And they usually need much more – roof, electric, plumbing, furnace, drywall …
I do, however, agreee with Andy that seasoning isn’t always an issue. I also use a local bank that does 80% refi’s with no seasoning requirements.
Re: How would you handle this purchase/junker? - Posted by michaela-CA
Posted by michaela-CA on April 08, 2008 at 14:30:15:
Just some quick points: there’s no way a ‘junker’ only needs 4k to fix up. I seldom have seen an ‘immaculate’ house needing only 4k.
It’s not only the private money that lenders shy away from, it’s ‘seasoning’. If you haven’t owned the house for 12 months, it’ll be difficult to get a mortgage to refinance.
Others here may point you into a direction where to look.
Michaela
Re: seasoning - Posted by Andy
Posted by Andy on April 08, 2008 at 17:11:44:
I have had no issues with seasoning. Go to a smaller bank that holds the loans and sit down with the loan officer and explain your business. Last year I bought two houses with private money(my own), fixed up the places for around 4-5 thousand each and then mortgaged them for 80% cashing out above all expenses nearly 2 grand on each. He understands that this is buy and hold and that the rent will cover the PITI. I don’t own enough properties yet to have to go with commercial loans