Posted by Erskine on November 08, 1998 at 07:21:54:
Is it possible to obtain a homeowners loan on a property purchased on contract?
Need advice on what to do with first house. - Posted by Jeff
Posted by Jeff on November 06, 1998 at 20:38:18:
We just bought our first house. All it needs are cosmetics ($6,000 tops depending on the quality of the carpet etc.). We bought it for $55,000 and the as-is appraisal came in at $68,000. All the comps in the area are at $89,000 or so for 3 bedrooms and 2 baths. Here’s our question. We used a 10% investor’s loan and as you can guess shared a portion of our profits with the bank and mortgage broker. We are trying to think of a way to avoid the hassle/cost of a mortgage and just pay cash for another property or two. Instead of flipping this house as we intended to do, we are thinking of turning it to a rental ($750/month or so) and taking out a second mortgage to raise cash that would be “recycled” as we buy and sell other houses. We would have to pay the points etc. one more time, but then we would not have to mess with it again. As a rental, our rehab cost drops and if the cash is not tied up in another house, it is waiting to be used earning about 5% or so which defrays our mortgage interest. Is this a good idea? How will the banks view a second mortgage on an investment property? We would even like one of those 125% loans so that we can raise as much cash as possible.
Joe is right - Posted by Jason-DYX
Posted by Jason-DYX on November 07, 1998 at 11:11:08:
If you use your own money or credit to invest in RE then it should be for short term deals.
There are many houses available that you can get without your money or credit on the line. These you can hang on to.
Ron LeGrand says" if you use your own money or credit in this business you are doing it wrong!"
You can get just as many deals without money or credit so why use it when you don’t have to?
Jason
Re: Need advice on what to do with first house. - Posted by Joe Kaiser
Posted by Joe Kaiser on November 07, 1998 at 01:25:16:
You (1) bought a house cheap, using (2) a new loan at a nonowner occupant rate, that (3) needs $6000 in repairs that (4) when sold, will net you $25k.
And now you want to rent it out?
This is a property that screams “resale.” Instead, I’m guessing you fell in love with your first house and now want to keep it. Bad move.
Sell! Now you’ve got a few bucks to grease the wheels for new deals. Points and fees are a cost of doing business, I wouldn’t sweat them.
We like to keep the seller financed homes with low interest rates and not much cash invested in them. Those are fun to own.
We like to sell properties we had to invest fix up dollars in or used “investor” loans to acquire. Those are a pain to own.
Joe
Re: Need advice on what to do with first house. - Posted by Redline
Posted by Redline on November 06, 1998 at 22:41:17:
Idea: Perhaps you could L/O this house to someone handy, get $950/mo in rent and offer a portion of that as a credit to the buyer IF he excersizes his option at some given time in the future? Of course the purchase price is determined now: how about $97,000?
Just an idea.
RL