Is it possible to finance holding costs? - Posted by Dan

Real Estate Investing Real Estate Financing
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Posted by Dan on February 17, 2003 at 15:07:07:

Hi Michaela,

Thanks for the feedback, but I’m comfortable with the deal. It will cash flow and we have a good exit strategy. (we also don’t have the $25K in “comm.” you reference.)

I’m REALLY looking for how to finance the holding costs – whether it’s for this deal or the next one.

Thanks,
Dan

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Is it possible to finance holding costs? - Posted by Dan

Posted by Dan on February 17, 2003 at 12:32:06:

I’ve found a seller who will accept $290K for a house worth $350K. It needs $12K in repairs. I can get financing, but the monthly payment is around $2000 PITI. I’d like to include the repairs and six months of holding costs into the loan.

I’ve heard that I can add the repair costs to the offer, and have the seller “gift” it back for repairs (put the repair money in escrow), but I’m not so sure how to handle another $12K in holding costs.

I know banks/lenders do not like to give cash back at closings (like an extra $12K), and the last thing I want to do is anything illegal, but is there a way to structure the offer to the seller so that the holding costs are included in the financing?

Thanks in advance for any help,
Dan

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Re: Is it possible to finance holding costs? - Posted by michaela-ATL

Posted by michaela-ATL on February 17, 2003 at 12:58:39:

Dan,

I know you won’t like this answer, but this really doesn’t sound like a good deal. It’s just too skinny. 60k may sound like a lot of money, but it’s not, when you’re looking at it in proportion of the deal:
Purchase 290k
repairs 12k
6 mo holdg 12k
comm. 25k
3% closg 10k

total : 349k

That doesn’t take into consideration budget over run, Your own closing cost for financing etc. Even, if you think you’re going to sell without agent, in that price range it’s difficult. Also, those numbers are all based on you getting full asking price of 350k.

I would walk from this.

michaela