Need Advice, Please!!!! - Posted by Richard-(FL)

Posted by Dan Stra on April 16, 2002 at 21:29:41:

To some people 35k is not a lot of money. Ask around and see if a friend will lend it to you for 6 weeks. Offer a nice flat amount for the use of the money. You know? $750-1,000.00

You will be out less than a grand to borrow the money but then be in a 100 percent equity position.

Once you own the house outright you can then get a home equity line of credit to the max amount

I just did this last month and it works great. In fact, the bank is sounding like they will lend us MORE than what we want.

I hope this helps.


Need Advice, Please!!! - Posted by Richard-(FL)

Posted by Richard-(FL) on April 16, 2002 at 19:45:40:

Okay, here’s the situation:

Seller has a home that used to be his primary residence.

He has since divorced and remarried.

Ex-wife and he are still on the deed and loan to the property.

One thing to note is that he and his ex-wife still get along and have no hard feelings toward each other.

He and his new wife have bought another home and rented the previous home to a tenant.

The property’s info:

3 BR / 2 BA

Built in 1979.

Needs $15,000 in repairs.

Comps at $63,000 to $65,000.

Currently financed with the original FHA loan from 1986 (non-qualifying assumable) @ 12% over 30-years.

Remaining principal is approx. $35,000.

Monthly payments are $670 (P.I.T.I).

Rent rates in the area are $650 to $725 per month.

If I take the property subject to the existing financing (even though it is NQA, I could save time and money…not paying an assumption fee…by just taking it sub2 and getting the deed), I will not have any money to do the repairs.

If I use a HML, the LTV is there for the purchase price, but I will still be unable to get the $15,000 for repairs.

Is there any way of taking the property sub2 and borrow the $15,000 and use the property as collateral (even though I have the deed, the existing financing will be in the seller’s name)?

I could LO from the seller and not have any payments due until the repairs are complete, but I do not have the $15,000 for repairs.

I know this deal can be done, but I need some advice on how to structure it.

Any help will greatly be appreciated.



FHA NQA @ 12% - Why no refi in all these years? - Posted by Tim Fierro (Tacoma, WA)

Posted by Tim Fierro (Tacoma, WA) on April 18, 2002 at 02:50:21:

… Currently financed with the original FHA loan
… from 1986 (non-qualifying assumable) @ 12%
… over 30-years.

This question is really for anyone, not just you Richard.

Was there anything special that would prohibit people who had these loans from refinancing? I mean at the time of 1986 all the way to recently at 6%; they kept that 12% loan in place. Is there something special about these that made these people keep the loan in place instead of refinancing at any period over the next 15 years of the loan?

Re: Need Advice, Please!!! - Posted by Jonathan Rexford

Posted by Jonathan Rexford on April 16, 2002 at 22:00:01:

Whats the back end? Fix and Flip or hold long term? That should help you make the decision on what you can do with the property. As far as getting the deed. I would do sub2. The repairs? Get the money from someone that is private. Offer a good rate and put them in second position once the property if rehabed you can make that Back end decision. Refi at a lower rate and keep as rental. Or maybe flip it…Good find though.

Jonathan Rexford

Re: The first thing that needs - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on April 16, 2002 at 20:39:51:

to be determined is this. Will the ex-wife sign a deed over to you? She is just as much “the seller” as her ex-husband is. She has ownership, and the part about how nice she is will make no difference if she will not deliver a deed.

It is also quite likely that the new wife also has ownership and will need to deliver a deed to you. This could get interesting.

You mention doing a L/O, and if you do that be sure that you have the signatures of all of the owners. An option from a person who can not deliver the deed has very little value.

Re: The first thing that needs - Posted by Richard-(FL)

Posted by Richard-(FL) on April 16, 2002 at 20:54:09:


Thanks for the advice.

You bring up a very good point.

However, say that I get past that obstacle…how could the deal be done?



Re: If I wewe doing this - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on April 16, 2002 at 21:03:38:

I would take title “subject to” the existing financing, and then take a look at a refinance. The existing 12% is a bit high for my liking. If the loan is 15 years old, or more there should be some equity to work with.

If the sellers need money I would try to give them notes that were secured by something other than the property.

After all that is done I would look at selling the property on a "wrap’ of some kind, thus allowing the new buyer the experience of doing the repairs. I like cash flow a lot better than repairs.

Who knows the present tenant might just want to become a homeowner at some point in the very near future. Perhaps a lease option would work here.

Thought of that too, but… - Posted by Richard-(FL)

Posted by Richard-(FL) on April 16, 2002 at 21:14:11:

…will it be difficult to refinance the loan with the property being in its current condition (needing repairs)?

I thought of having the current tenant buy the property on terms, but the seller said he tried to sell the house to her on a LO a few years ago and things fell through due to some glitches with her credit…so, she just continued to rent from him after she was unable to qualify for a loan.

I like your idea of selling on a wrap (or similar technique) and agree with the advice of cash flow being better than a repair project.

However, (back to the question), wouldn’t you think that it may be hard to find a lender that will refinance with the house being a “fixer-upper”?

Thanks again,