Offlinei have bad credit, but just talked to a hard money lender who lends 80% (on the appraised value of the house). I am wondering if this works as follows...( i am brand new and not a math whiz so please be patient with me )
the house is appraised at $100,000.
i have already got the buyer to bring the house price down to $70,000.
So if I borrow $20,000. from a friend to use as the downpayment, can i get $80,000 from the hard money lender, and at close, give the $20,000. back to my friend? then pay the seller $70,000, pay (say $7000ish) in closing costs and still come out of the deal owning the house (with monthly payments) and have $3000 left over from the transaction?
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You will have closing cost and attorney fees plus I'm sure your HM lender is charging you points (1% each point) typically I see any where from 3-6 points being charged. Yes your lender would give you $80,000 from the Appraised value of $100,000 but you have other cost to think about it. Also If your paying $70,000 and the house ARV is $100,000 that leaves you with $30,000 of equity. The question would be will this house need any repairs and what would be your exit strategy with this property? Also you have to take into account that you will be making monthly payments back to your lender.
Reynold Orozco
I would look at opm for the whole deal. Hard money is just that HARD... It is out there and all the want is 6-8% return on their money. Know your number when you do the deal inside and out.
Not having a goal is worse than not setting one..
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I agree with Ray and keith.
Here my suggestion: If I was you I would wholesale that property to a buy and hold investor who isn't looking for much % below market value but ranther is looking for a good return on his/her money each month. All you have to do is get the property under contract with an exit clause saying "THIS CONTRACT IS SUBJECT TO INSPECTION BY BUYERS/ASSOCIATES WITH 14 BUSINESS DAYS." The more inspection days you can get is much better, that way you have more time to find a buyer.
You can find buyers by posting the property on postlets.com, craiglist, networking with investors in REI clubs, and calling agents in the subject property area. Here is what you tell these agents "We have a unique ability of finding great deals more than anybody could find, if you throw us a buyer who closes on it, we will give you 3% of the sale price as your bonus, are you interested or not?" Most of them would say they are interested and you email them the property.
Wholesaling DO NOT require good or bad credit that's one thing good about it and it also bring quick cash into your pocket and you are on to the next deal.
I hope this helps and good luck.
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TC
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Hi Jamie,
Just throwing in my 2 cents...the HML will want to know the exit strategy for them to get paid off. Typically they only lend short term, 6 months to maybe a year. So you'll have to refinance (can you?), or sell the place.
Good luck and let us updated!
- Tom
I'm in canada and I need to find a lawyer or agent familiar
With wholesaling and assigning contracts. So far
I've had no luck in a lawyer understanding how to assign
The deal to an end buyer! I'm seeing one on Friday. I still don't fully
Get how the procedure works here. I've been told
I can be sewed if. I screw it up.
As for the hard $, the company says they will hold
The mortgage for as long as I want - so my strategy was going to
Be to buy an hold for cashflow. Thoughts?
Also this property is a triplex
So the HML will let you borrow against the appraised value rather than the purchase price? Ok.
Does the property cash flow? Figure 50% of the gross income going toward operating expenses and vacancy. Then take out your mortgage payment. What is left? It should be, at a minimum, $100 cash in hand at the end of every month. If not, then this is not a good investment property under your loan terms.