I need some financing options advice! - Posted by CharlesinTx

Posted by Ronald * Starr(in No CA) on September 18, 2002 at 01:06:00:


I always worry about a potential investor who mentions an appraisal on the property which obviously came from the property owner.

My rule: NEVER believe a appraisal provided by a seller. NEVER EVER. Ignore it.

You have to know the value yourself, through your strong knowledge of the marketplace where you invest. If you do not have that knowledge, then get a bunch of comps from somebody who does not have a stake in the deal and assure yourself that the property is a good deal for you.

Now, the rent compared to the value sounds good to me. If you have verified that that is a real rent, received month after month. And you feel that rents are not going to be going down in your area any time soon.

I think your # 4 option sounds good, if you can get the person to deed to you. But why a quitclaim deed? That is a weak deed. Get a warranty deed. Or, better yet, consult with an attorney in your area about taking title to the property.

Why not try to just buy it conventionally? Get a 75% or 80% investor loan–or higher if you can–and get the down payment money from your credit cards. Then dedicate the rental income to paying down the credit cards as quickly as possible. In fact, pay in what you can of money from other sources to help pay them down quickly.

If you move the cash advance into a saving or checking acount you can truthfully answer the question “what is the source of the down payment?” as “savings account” or “my checking account.” This may still not fly with some lenders, they will want to see that the money was in your account for six months before they believe you saved it up. But it may be worth a try. You might want to work with a mortgage broker who will help guide you to a good loan.

You will have the property inspected by a termite company and a home inspector won’t you? Maybe by a roof inspector if you have any doubts about it.

Good InvestingRon Starr**

I need some financing options advice! - Posted by CharlesinTx

Posted by CharlesinTx on September 18, 2002 at 24:24:16:

Hi. I live in Texas and have found a pretty good deal on a house (I think). Owner owes $44,000 (FHA qualified assumable) and is willing to sell it for that price. It appraised for $62,000 less than 2 years ago. It has been rented out the past 2 years at $650/mo. I want it as an investment property, so I have been looking for financing options to close quickly. They are adament on wanting the note out of their names, so alot of “legal” creative options are out. I also can’t assume it since its NOO. My questions are:

  1. If I can get the $44,000 out of credit cards/personal loans, would this be a better option than getting a conventional 10% down investor loan? I figure I’ll save some money from closing, but I think the interest would eat me up long -term. I have cards in the 6-9% range, but it’s revolving vs installment money.
  2. If I were to use the credit cards, I think this would be the better option if i could immediately refinance it. Is this possible or do 99.9% of lenders need 12 months seasoning?
  3. Whats your opinion on doing an 80/10/10 and having the seller forgive the 2nd? Is this illegal? Does it matter if I buy the 2nd note back for a hugely discounted amount, like $10?
  4. Can I have them quit-claim it to me and then refinance? is this the same as subject-to? What type of insurance issues would I have then?
    I really appreciate any and all comments. Thanks for your help!