Posted by John Corey on June 18, 2006 at 07:11:11:
Chelsea will lend in TX depending on the details of the deal.
Send an email.
John Corey
info@ChelseaPrivateEquity.com
Lenders which will lend on appraised value? - Posted by Joe Walker
Posted by Joe Walker on March 30, 2006 at 16:31:45:
Hi, I am looking for a names of lenders which will lend on the appraised value of an investment property instead of the purchase price. For example, I am looking to reduce the amount required for down payment and avoid PMI when I locate a property which appraises at $350,000 but am purchasing for 300,000. My credit rating should be in the low 700s.
Thank You,
Joe.
Re: Lenders which will lend on appraised value? - Posted by Ben Carmona
Posted by Ben Carmona on April 01, 2006 at 15:03:17:
Joe,
The possability of having a national lender do this does exist. As I mentioned before you would have to put a minimum of $10k in work into the property. This way it would fall under their rehab program and be based off the value, not sales price.
Only draw back with this lender is that they will only allow 1 “rehab” loan at a time on their books.
Ben Carmona
Re: Lenders which will lend on appraised value? - Posted by Ed Garcia
Posted by Ed Garcia on April 01, 2006 at 11:24:38:
Joe,
Let me give you some food for thought,
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There is no National lender that will lend 100% of appraised value when purchasing below appraisal on an on going basis. Lenders attitude is, purchase price or appraised value, which is ever LOWER. If there were, you wouldn?t have had to ask for one, and 10 investors on this board would have given you a lenders name.
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Rarely will you find a broker give a lending source on the board. The reason is because if you should use their source, they want to participate in the deal. I understand that and appreciate them for sharing their knowledge in hopes of getting some business as long as they?re discrete about it. That?s why James Harris asked you to drop him a line.
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The two types of lenders that can assist you in your given area will be at both ends of the lending spectrum. They are ?Hard Money Lenders? and ?Banks?. You don?t have to work a Hard Money Lender, they immediately recognize the deal with built in equity and will give you a loan. The Bank takes a little work. You have to present the deal from the stand point of cash flow and upside or ad on value. When you first approach a bank they will tell you that they lend on appraised value or purchase price which is ever lower. But trust me, if you convince them that you?re conducting your REI as a business and demonstrate that you know what you?re doing via a business plan, they will play. I?m sorry I can?t give you a name of an immediate lender in your area, but now you have a better idea of what kind of lender to look for.
Ed Garcia
Re: Lenders which will lend on appraised value? - Posted by Ben Carmona
Posted by Ben Carmona on April 01, 2006 at 04:21:15:
There are several lenders that brokers have access to that can do a rehab loans. This loan is based on the after repaired value. $10K would be the minimum needed for any cosmetic/repairs. So in your example…purchase of $300,000 + $10,000(rehab)= $310,000…based upon appraising at $350,000 would be a 90% ltv. The loan can be split up into an 80% 1st and 10% 2nd so there is no pmi.
(Initial funds are dispersed out of escrow as a construction loan and this will modify into end financing when the work is completed)
Ben Carmona
Re: Lenders which will lend on appraised value? - Posted by John Corey
Posted by John Corey on March 31, 2006 at 09:13:35:
Joe,
It is not common in that many lenders figure that the sale price is the market price so they use the lower of the sale price or the value.
All successful RE investors know that there are deals out there which are available for less than true value. The difference between an investor and the lender is the amount of due diligence put into determining the real value and a desire to deal with the risk. A lender has no upside other than the interest paid and is not looking to take a loss. An investor will roll the dice and deal with the outcome.
So, if you find a lender then you have to ask why will the lender take on the added due diligence and the added risk?
Ultimately the lender has to adjust the loan terms to cover the risk and look at other ways to adjust the returns in case they get the risk assessment incorrect.
Lets assume you find such a lender. Expect they will have higher fees, higher rates, lower LTV, higher credit score requirements or similar ways to change the mix. The loan will not have the highest LTV at the lowest credit score and lowest interest rate.
Are you looking for short term financing or is this a buy and hold situation? Can you pledge other equity as a blanket security for the loan?
Ultimately you might find the best way to achieve what you want is to look to the seller or to use other property and other debt as a way to make the numbers work on this property. Credit cards, a HELOC, notes held on other property and other such things so this transaction appears to have more cash in it.
You have to ask yourself why a lender would lend on the appraisal (they can be wrong - mistakes or from fraud), expect little cash from you in the deal and offer decent terms on the interest plus fees? If one loan goes bad how many other loans do they have to have work correctly just to get back to zero? Lenders have so little upside one bad loan can wipe out the profit from a lot of good loans.
John Corey
Re: Lenders which will lend on appraised value? - Posted by James Harris
Posted by James Harris on March 31, 2006 at 06:07:36:
Mr. Walker, Jim Harris; I believe that I can help you in your delimma( I hope I spelled that right). Drop me a line.
Re: Lenders which will lend on appraised value? - Posted by PAUL
Posted by PAUL on June 06, 2006 at 11:56:20:
LOOKING FOR FINANCEING TO DO FIRST PREFORECLOSER,FOUND PROPERITY ALLREADY GREAT DEAL BUT I NEED FINANCEING WILL SPLIT 50%50%
Re: Lenders which will lend on appraised value? - Posted by Mr. Shay McDowell
Posted by Mr. Shay McDowell on April 01, 2006 at 15:55:07:
Ed …
Thanks for your Honesty.
What makes a Banker “play”:?
Why would a Bank play because they know it takes time to bring it to the attention of others ? and the remote plausiblity of the word itself is denial and stain to whom? more than the applicant more than the abyss?
How do we dig out of this mess ? Trial and error & ommission. Not funny? I know. I agree. After reading your message I thank you for your Honesty that is all…and would Be proud to pass your name on.
…
Thank you - Posted by Buddy
Posted by Buddy on March 31, 2006 at 19:10:33:
Thank you from a board lurker!! You answered this persons question, gave additional information and did not just respond with “Sent you an email”! Replies like yours add value to this type of board and you may not receive anything for your time.
Thanks again,
Buddy
Re: Lenders which will lend on appraised value? - Posted by Lachin
Posted by Lachin on March 31, 2006 at 09:22:31:
Please share this with us too. I hope you are not a hard-money lender because I need financing for longterm rental properties.
Re: Thank you - Posted by John Corey
Posted by John Corey on March 31, 2006 at 20:42:23:
Buddy,
I am glad I could offer some insight.
I do get value in at least two ways. First, by trying to help people with answers to their questions I stay more connected to what is going on in the market.
Second I really do like answering questions. For me it is fun and a way to take a break from other activities. I am glad that you have benefited in some way from the information shared.
John Corey
Re: Lenders which will lend on appraised value? - Posted by James Harris
Posted by James Harris on April 04, 2006 at 05:58:28:
Call me at 660-429-3874
Re: Lenders which will lend on appraised value? - Posted by Rondell Terry
Posted by Rondell Terry on April 04, 2006 at 11:14:11:
You lend on appraised value? For example, if I found a property worth over 40,000, but was selling for less than 25,000 you would fund that deal, even if my credit is low and down payment funds are limited?
Re: Lenders which will lend on appraised value? - Posted by John Corey
Posted by John Corey on April 07, 2006 at 12:26:00:
Such loans are possible. Very few lenders will do them. Mostly a hard money lender who is not trying to resell the loan and will do the extra due diligence.
John Corey
Re: Lenders which will lend on appraised value? - Posted by Rondell
Posted by Rondell on April 07, 2006 at 12:30:52:
Thank You, you were very helpful.
If an owner deeded me their property, could I use it as collateral to get a loan
Re: Lenders which will lend on appraised value? - Posted by John Corey
Posted by John Corey on April 07, 2006 at 15:21:11:
The simple answer is : YES. Rarely are property deals simple in that sellers rarely just hand over the property. Some do but that is another story.
An owner deeding you the property implies that they are getting something of value in exchange or they really like you (the deed being a gift).
Tell me more about what you want to accomplish.
John Corey
Re: Lenders which will lend on appraised value? - Posted by Realestatejunkie
Posted by Realestatejunkie on September 12, 2010 at 02:14:47:
This reminds me about the lender caught up in that texaplex controversy. I can’t find the orginal, but http://www.lifestylesunlimited.com/why_investing_in_houston_real_estate_makes_a_lot_of_sense_texaplex_houston states the same thing.
Re: Lenders which will lend on appraised value? - Posted by rondell
Posted by rondell on April 10, 2006 at 11:14:36:
Do you know of any specific lenders willing to do this regardless of location of the property?
Re: Lenders which will lend on appraised value? - Posted by John Corey
Posted by John Corey on April 11, 2006 at 22:42:03:
Rondell,
I know of no lender who will lend on the appraised value in all 50 states. The lenders who provide such funding are more regional or local.
Where are you looking for deals? Lets narrow this down a bit.
John Corey