Am I Crazy for thinking this would work?

I want to start looking for the ppl mentioned above to start my money making cicle, but first need to clarify that up above. Any answers?

Hi jmunoz90

Your posting is interesting and it gives me a lot to think about. This is how I see it, help me if I’m wrong. I think you can get 100% financing or refinancing for the home at a bank ($250,000) with the house and decent credit if you stay with the old lender. This you can use to pay off the hard money man ($213,500), which paid the bank off for the short sale ($175,000), (the seller will not get any money because he owe more than the price of the short sale). The seller is only stopping the foreclosure and giving up the house. You can give the hard money man half of your profit, but I think he will take less of a percentage than half if you offer. In some cases you can flip the sale of the house to make a quick profit; if not then you can rent it out for the $200 profit a month you mentioned. The house would have to sell above the appraised price of $250,000 in order for you to profit, you will have to find a buyer willing to pay the price above the $250,000, Good Luck.

Betty

Ding! Ding! Ding! You have it correct. I woke up this morning though, and looked it over again. What I did noticed is that the seller, doesn't make anything but he saves himself a headache by not facing a foreclosure and not hurting his credit. What I did find out is that banks now only offer 80% of the FMV when you refinance ($250,000x80%=$200,000) but that's alright because I put an even lower offer that got accepted which I still profit from ($200,000-$175,000=$25,000 equity/profit) so I would then refinance and get 80% of FMV plus the difference that my low offer profitted for me ($200,000+$25,000=$225,000) I would then go and pay off the hard money man plus his half and I gain the rest ($225,000-$213,500=$11,500/2=$5,750) So I gained $5,750 and got a property w/ tenants at a cashflow of $200/mo. Hope this broke things down in easier terms, since before I didn't know how to word myself. You actually helped me to put in a smoother flow haha, thanks.

how great you are doing if you can gain $5,750 AND now have a property with a $200 cash flow that nice & will go back up in value in the next few years!BUY & HOLD man!But you look too sleeply in your picture to think

Yeah that's my intentions, I want to have a porfolio of my own goin at one point, but i will be driving aroung today to see which banks do not season and what's their % on refinancing and what would be my % for my monthly payments, etc. So true, I want buy and hold just so I can get the feel of what it is to own and no the pros and cons of it. I know I was definitely sleepy and very tired that day, that picture I was taking in Iraq by my roomate, I was awake for 72hrs straight, no sleep, it sucked! haha..

you look TIRED, but if you do deals like that while sleeping, Rest On....HaHaHaHa.....keep it going...

Ok, I’m a little confused.

You owe the hard money man $213,500 to purchase the house.

You purchased the house (short Sale) $175,000, this you pay to the bank for the seller, he is out of the loop now.

You are not selling the house at this time so you don't have the $25,000 profit.

Now you have a house valued at $250,000 FMV

You go to a bank and get financed for $250,000 the FMV.

The $250,000 - $213,000 = $37,000 profit divided by 2 equals $18,500 each.

From the $250,000 you pay the HMM $213,000 (loan) + $18,500 (Int.) = $231,500
I think $18,500 is the profit you will receive from this transaction.

Now, you have a loan from the bank for $250,000 for the house.

The $250,000 will be paid back monthly from the rent the house yields until it is sold. The repayment of this loan is out of the loop for now.

You did not use any of your money and it is a no money down deal. You got a monthly positive income plus a profit of $18,500.

Don't get me wrong, this is still a great deal to make. I'm looking for the "Hard Money Man" that I can borrow that much money from.

That will be the way to go.

I just got back from sitting down with 10 mortgage brokers from 10 different banks which helped me out on knowing the way fannie mae and and bank's strict rules have effected things. But with this being said, here its how it stands. So after going through 10 different opinions, it has changed my plan because I thought too much and missed the minor things.

I DO NOT owe the HMM $213,500 because I forgot that I bought the property CASH so I don't need to put that 20% down($35,000) So it changes the numbers as shown:
$175,000(property)
$15,750(2% closing cost + 7% from escrow, and taxes of purchase price, so $175,000 x 0.09 = $15,750)
+_______
$190,750(total purchase)

So really, I'm going to be asking the HMM for $190,750.

I will then Refinance, which will take about 30-45days for the mortgage to kick in, meaning I'm going to have to pay the % agreed on the contract between me and the HMM for that month (a very helpful Broker helped me realize this) So this can effect me depending how much the HMM agrees to. Another thing was, the broker made me realize that refinancing, the HMM is not going to see that he's profitting because I have a property under my name + half of what I made and since I refinanced for what the bank approved for which was 80% of FMV, that leaves 20% equity still left on the property, meaning I have to take that into consideration from the HMM's point of view. So my Broker said that it might not be fair to the HMM, but see if he's willing to compromise which I will do when I sit down with a multiple of them, since overall I seen 10 mortgage broker and 1 seemed supportive and very helpful at the same time then all other 9.

Now, when I refinance I will have $200,000 to look at ($250,000 x 80%)

So I have $200,000 - $190,750 = $9,250/2 = $4,625 split profit

So now the HMM gets his $190,750 + $4,625 w/o doing any work.

And, I make $4,625 but this property would be mines (owner-occupant)

Since for investment properties, the wheels change because it's less than 80% refinancing. It actually ranges from 55% to 75% depending on the bank, your credit score, your debt to income ratio.

Another negative thing is, if it's an Investment property and you buy it for a low offer and try refinancing it right away, they would go of the less profitable amt whether it is the sales price/offer or the assessed value at the time and base your refinance of at that price and this is even considering holding onto the property for 6mos to a year, it still doesn't matter.

I got to get out of here, move away if I plan to make money. Geez!

I just read through your thread. Yeah, the banks are pretty tight on refis. BUT if you can find a credit partner and pick up properties that are NOT listed, you might have better luck. See if there is a small local bank with in-house loans available. Their guidelines will be less strict and might fit better into your plan. Also, forget about the HML. Too expensive. Find private money instead. Now I know you're thinking, yeah right where am I gonna find private money? But you'll be surprised. I'm guessing especially down there, there have GOT to be people with money that would LOVE to have a bigger return than what they are seeing in an IRA or CD/savings account. All YOU really need to do is find great deals and the money will come to you. Also, the same people that would make up your buyers list are potential resources for private money. You just have to start networking. (Have you joined an REI Club yet?).

One more thing, you can always to REI from a distance. You are definitely not restricted to the area you are in, even if you physically have to remain there. So many avenues you could take.

So, stay focused and see every obstacle you encounter as a stepping stone. Look how far you have come already in just this short amount of time! You are gonna do great.

Wishing you much, MUCH success!

Rina