Posted by James Strange on January 03, 2003 at 24:44:24:
I have to admit that I do not have the answers to your questions. But will the other owners carry a note with a 12 month ballon?
If they want cash I would recomend finding a hard money lender and see what they will lend. Perhaps you could get some rehab money that way.
question - inherited investment real estate - Posted by Dan
Posted by Dan on January 02, 2003 at 22:45:08:
about a year ago, i learned that my great aunt died and - to make a long story short - i would be one of 3 inheritants to her estate. she happened to have a great deal of property in a suburb of detroit, michigan. she had 6 properties and 2 vacant lots all within a quarter mile. the 6 properties had not been cared for in the past 4/5 years and are currently boarded up. because there was no will, the entire estate has to go through porbate court, etc. etc.
now, i have the opportunity to buy the entire group of properties for $300,000 (basically $200,000 because 1/3 of these properties are already mine). would this classify as a re-finance??? if so, is the downpayment on a mortgage less than a non re-finance?? what is the best way to finance this - with the least amount of money down. if not a re-finance, what would i have to put down if these were classified investment properties - 20%??? finally, i estimate i will need about $150,000 total to make the properties rentable and or sellable. what is the best way to come up with this money???
thank you…dan
Re: question - inherited investment real estate - Posted by Ed Garcia
Posted by Ed Garcia on January 03, 2003 at 02:16:59:
Dan,
Yes, since you are one of the heirs of the estate, the deal can be treated as a re-fi to buy out the other heirs and you’re 1/3 can be considered your equity in the deal.
However, you’ve given us the impression that the property is valued at $300,000 and that you can buy out the other heirs for $200,000. My question is if the property is valued at $300,000 and you buy them out at $200,000 and put $150,000 into it, now you’re in the deal $350,000, $50,000 over equity.
I’m sure you’re going to come back and tell me that the $300,000 is the value under the current condition and that when it’s fixed up, it will be worth considerably more. Before I could advise you, I would have to know what the new LTV would be and the expected cash-flow if you’re going to hold.
But to answer your question for now, you can treat it as a re-fi. Lenders will accept inherited equity.
Ed Garcia