Equity in a property contract

Depends on your strategy here. Are you wholesaling/assigning, buy/hold, buy/flip? Sounds like if you're looking to go to the bank for a loan, it's definitely buying. Yes, that can be done, subject to limitations:

1. If you buy a property worth $100k for $80k and do nothing to it, the property is now worth $80k. You just set the new comp for it. In a year if other comps are worth $100k, you can get it re-appraised and pull out that $20k equity. How much you can pull out, if anything, depends on if you're living there, it's a investment property, credit, etc.

2. If you buy a property worth $100k for $60k, put $20k into it, and show that to the appraiser, yes, it may be worth $100k (ARV) on the spot because the rehab forced up the value. Instantly refinancing it and getting a loan for that equity may still be tough.

This is why many people flip the property, to realize the gains immediately. Of course to flip you have other costs, that's why the 65% of ARV formula comes into play.

Hope that helps,

- Tom

Andre,
You have a contract to 'purchase' the property within a certain time; and the contract 'locks' the property so that the owner cannot sell it to another buyer while you have it under contract. That doesn't mean that you own the property and you can get an equity loan with the property as collateral; however, as Tom says, you can get a loan to purchase the property...

Wishing you success,

Thank you Tom and Valerie for the great wisdom and advice that you have given to me.