Re: Legit or Not? that is the question… - Posted by JPiper
Posted by JPiper on October 24, 1998 at 16:35:38:
I don?t think your post is clear as to exactly what you?re doing here?..and therefore I would diverge from the posters below.
There are some lenders who will loan based strictly on asset value. These are call hard money lenders. You might get 65%-70% of the fixed-up value. They would probably operate the loan similar to a construction loan by releasing funds in stages as the rehab is completed. Costs of this loan will be high?points up to 10 points perhaps, perhaps up to 15% interest. The loan will be short term in nature.
What bothers me about your post is that I get the impression that perhaps what you have in mind is somewhat different than this. Let?s say that what you have in mind is that your friend ties the property up for $25K, signs a new contract with you for $65K?.based on which you obtain a loan for $50K. These two contracts are closed simultaneously. Now you and the friend fix the house and put the remaining money in your pocket. Under this scenario you may well have defrauded the lender. Further no conventional lender (aside from hard money lender) is going to loan you $50K on a $65K house with no down payment from you. What conventional lenders are basically wanting to see is an arm?s length transaction between the buyer and seller, with a downpayment from the buyer of a % dictated by the type of loan.
Perhaps you could post the complete and exact details of what you propose so that you may receive a more complete answer.