It will take 10k to fix the property. purchase price is 65K. The property is a 3 unit apartment. We’re only leasing the one unit that needs fix up the owner is still collecting rent on the other two units that is occupied. He is getting $1,125 for those two units. As soon as we are done with the fix up we will exchange title. We’re expecting to fix the house by month end, so we’re only paying one 300/month. We want to refinance to get back the cash we spend on fixing up the property. How long would we have to wait to refinance?
I have this house undercontract, originally the owner offered to let me assume the loan and finance the difference between the asking price. He wanted 3K down but my partner and I tried to get no money down because we’d rather use the money toward fixing up the house as needed. He has agreed to L/O to us with 1K in option money and $300/month until we fix the house and close. On the contract for the house he wrote that we will get an 80% loan and he will finance 20%, which is fine. We wanted to refinance the house because it will appraised for at least 25 percent above cost and fixup. Do we have to wait until after we close to refinance and get cash out or can we do a simutaneous closing for the purchase price and refinance at the appraised value.
Posted by Ed Garcia on November 07, 2000 at 08:26:47:
Keen,
You don’t tell us how much it’s going to take to fix up the house. How the house shows will be reflected in the appraisal. The lenders also like houses that show pride of ownership. I would take pictures of before and after so that you have justification for increase in value. To do it right, and to have no repercussion, I would do my lease option for a year and that way no one can question seasoning on the change of value. If not you may risk the lender questioning the value because they will see the change in title and know that you have just acquired the property and for what price.
Simultaneous closing is illegal in this case, the only reason you would do it is to DEFRAUD the lender.