Zero down - IMPOSSIBLE (POSSIBLE)

Hi pid85307,

Yeah, the market is not great for investors like us who have no capital and need to wholesale deals first before trying to purchase properties, BUT it's not impossible. I have been searching and trying to do a wholesale deal, and have run into the same obstacles you have. I figure that before the market became flooded with REO's, you probably had to touch base with at least 25 sellers before finding a deal (at least that's what I've read on previous post from early last year.) Now that the market has all these REO's you probably need to double the number. So, I keep plugging away, advertising on craigslist, backpage, etc. I just ordered some bandit signs, so I am adding a new advertising method. Also, I am now looking into bird-dogging just to get my feet wet. I know that once I get my first property, the rest will come easier. As a matter of fact, I received a call from a very motivated seller today. We talked, but the property is in a very restricted 55 and older park. The deal is not going to work out, but at least I'm getting calls. At least I know I am making progress. Eventually, I'll find the right deal.

KimmyJ

100% financing on investment properties is NOT impossible. You just have to look in the right place. There are commercial lenders out there that have purchase/rehab programs available. They most likely will be one of your local banks. Ask every investor you know where they are getting their financing or join your local REI group for networking purposes.

What you will find are lenders that will lend up to 100% of the purchase price of the property, and in some cases the renovation costs as well, as long as the LTV does not exceed 70%-75%. They will probably have 6-12 month terms and in some cases will roll that loan over into permanent financing after repairs are complete. You just want to be sure the property will appraise and cashflow.

We had one of our local banks actually create a program for us after we presented our business plan. It's not out of the question for banks to do this, you just have to throw the idea out to them in a way that seems profitable and know what you are talking about. We showed them properties we had done this with and they agreed to give it a try.

If you don't ask, the answer is always NO.

CTP

CTP....once again a great post......your experience is evident.

Sam

Great strategy CTP. After beating my brains over trying to find a 25% DP on a property, I finally swallowed my pride and approached my mother for the DP. Gave her an offer of a great return on her investment, 15% plus 5% on the net profit. I was approved for loan during a time I was still employed and now getting severance pay which technically indicates i'm still employed. Property is purchased for $73500,approx $10000 rehab, market value is $140,000 when finished, so I needed an $18000 DP. After looking at the rates for HMLs, I'd rather give a member of the family these type of interest rates than to someone I don't know.
Does anyone have knowledge on how to get DP money seasoned?

Thanks, Bruce

"Only those willing to risk going too far can find out how far they can go" -- T.S. Eliot

Go to FHA specialist lenders. Thing may have changed in the last couple months, but there was FHA loans possible for zero or little down under special programs setup.

My credit isn't too fantastic at this point,660 Credit score and in debt up to my eyeballs, but does this also apply for investment property?

Thanks Bruce

100% financing is very possible. You just have to find a deal that gives you 50% ARV and the bank will be happy to lend you the money. You just have to do your homework, research and run the numbers. Better yet, have someone from the bank to go with you and look at the property, and most likely they will lend you the $$ if they know you have a great deal in placed.

I've had my eye on this particular property for six months and it's a REO. The previous owner owes $50k on the property to the bank. I've tried to work out a deal with her on the property before it went to foreclosure, but she wanted $75k for it. She would not budge as i've tried to negotiate with her. I offered as much as $65K, but she sitll refused my offer. I aked for $65k given the fact that the house needs $15,000 of repairs. The house eventually went to foreclosed and she lost it and now the bank owns it. She was greedy, as i've tried to work out a win/win situation with her, but now i'm glad i've waited.

I negotiated with the bank through my attorney and the bank accepted my offer of $25,000. I went to another local bank and told them what i wanted to do with the property. I met with the vice president of the bank and we went and checked out the property. I told him that i wanted a loan for $40k, $25k to purchase the house and another $15K for repairs. He approved my loan for $40,000. Not only he approved my loan, but we negotiated a great interrest of 5.9% and in five years terms. I plan to rent for three years for cash flow, and then sell it for a great profit before the terms is up. I'm hoping to close the deal in two weeks. This particular property has been appraised at $105k ARV.

You see, if you find a great deal and you know that you can get it for pennies on the dollars, the banks or the lenders will most likely lend you the money. I have renters waiting to move in once the property is completed. You just have to keep working hard at it and don't let anyone stop you from living your dream!

Lloyd

hi kimmy

your post gave me a boost too...thank u.

here's to living the dream!
cynthia

Great post Lloyd! At the risk of asking a stupid question, what is "ARV"?

-- Mark

Mark,
Go to the top of the left hand panel on the page and click on the words:
Glossary of Terms

You will find it a great help.

Angela

I've learned that no such question is stupid question, especially if your a newbie. ARV stands for After Repair Value. Just follow Angela's advice. The Glossary will help you a great deal.

Lloyd

I think it's great that you tried to help this woman out. Her greed was her own demise. I'm glad you got the house at such a fabulous price though. Patience certainly does pay!
Thanks for sharing that with us.

God bless,

Hello all,
Does anyone know how anal the lenders are about having the down payment seasoned? My DP is coming from a family member and is not in an account with my name on it.

Thanks, Bruce

I tried to save her credit from ruin it, but she was so greedy that she refused to work with me. I even gave her my business card just in case she chaged her mind, but she finally called me after the property went throgh foreclosed, but it was too late. Any deals that comes my way in terms of foreclosure, i've always try to work out a win/win situation.

Lloyd

onthelynx95...

You may not need an actual down payment with numbers like your deal has. If the purchase price is $73,500.00 plus $10,000.00 in rehab costs, which equals $83,500.00 and the ARV is $140,000.00, this represents an LTV of approx. 60% ($83,500.00 divided by $140,000.00=.59).

There are banks (usually local) out there that have programs for investors that will lend up to 75% of the ARV, including repair costs, at very reasonable rates - 7.5%-8%. Ask for a commercial loan officer when you call.

You just have to "beat the bushes" and find them. Ask every investor you know where they get their financing. It's out there, trust me.

It may also be possible to get a "gift letter" from your Mom for the down payment, which means no seasoning. Check with your lender on that one. They may want to "source" the money from her but you can cross that bridge when you get to it.

Hope that helps.

CTP

Do you know how good your credit has to be in order to get the bank to loan you money for a good deal?

Thanks CTP. How would the lender feel if I told them I had a silent partner and was able to front the down payment?

Also has anyone dealt with HFC , Beneficial Finance or American General Finance for DP moneys

I have an ok credit score (650). However, what i've done in the past was that i've applied at two local banks, and sometime three and let them competed for my business. They were given the chance to see if i could do business with them. One bank offer the better interest rate and better terms and another one wasn't. On this particular deal, i've given FNB another opportunity as i've given the other bank. They wanted to look at the property, and once they saw it, they know how much the property is worth at ARV, and now they want to do business with me.

The fact of the matter is, if you have a great deal and got the property for 40-50% ARV, the bank knows their $$ is secured on that piece of property.

Lloyd

Very smart to get the banks to compete against each other, I like that. Thanks for sharing that, makes good sense! I tell ya, we've got some of the MOST savvy investors here at DG!

onthelynx95,
It's hard to say what the lender would say about a "silent partner" putting up the down payment. It depends on the lender.

Is this an REO or owned by an individual? If the seller is an individual, then you could possibly negotiate a subject-to deal direct with them, get the deed in your name, then refinance based on the actual value with a lender that does not require seasoning. Check your local laws to be sure that subject-to transactions are legal as they have been outlawed in some jurisdictions.

As for HFC etc., you may as well use a HML, the interest will probably be cheaper.

CTP

Lloyd - did you get the appraisal done yourself, and if so, before or after the banker went out there with you? If not, how did you get access to it?

THANKS!

Tracey R.

CTP

This is actually a HUD home. I was really surprise how well they try to keep up the home to sell, making sure the appearance is kept up, and supplying a detailed inspection report.

onthelynx95

The house was appraised by the bank, Marion State Bank (another bank who owns the property) eight months ago before it went to foreclosure at 105K. Those figures were based on the condition of the property, the size of the lot and the location. The property is located a block from the lake on a one acker lot, and given those figures (105k) i used that to get the property even before completing the rapairs. So basically, the property could worth a lot more than 105K at ARV, but i always uses low numbers in getting the deal when buying.

As far as getting access to the property, i mentioned above that i tried to purchase the property from the owner before it went to foreclosure, but she was too greedy to accept my offer, so when the bank finally took the property back, i made my move locked the property up with my attorney.

Another thing i want to point out is you have to understand the market value in your area. Most of the home (3 br 1-2 ba) in my area goes for 75K-100K. This is a four bed room, 2 bath with more than 1,800 sq ft, and not to mention is a block from the lake. Location, location, location!

Lloyd

did the bank volunteer to give you the appraisal info, or did you just ask and they said yes? THANKS!

Tracey

I asked for it. One thing i've learned on this fourm is never be afraid to ask questions. Ask and it shall be given aunto you, knock and it shall be opened!!

Lloyd

Is very important to you as a human being, Not to say how important it can be to your integrity. If your score is not what is to be expected, don't worry about. A good deal is good deal

Here at Dean Graziosi, People are just helping people- not to say maybe make some friend's.

(CREDIT SCORE) Remember the more time's you run your credit report, The lower your score will go. Like i read in Real Estate Million by DG, Let a broker run your credit report once and pass it a round. OR if you are running on your own, With $150.00. Go to a credit reporting service requesting three reports. Remember they do come sealed and mailed directy to the bank.
If a bank notice's other bank's looking at your CR, Well let's just say
how many loans are you trying to get.

Your associate
Randy Two birds----------One stone

I agree that 0% down payment financing is out there you just have to keep at it until you find it. I've been an investor now for a little over a month working with Dean's coaching staff and have my first two properties in escrow, working on a third, that will both be financed 0% down. The only money coming out of my pocket will be a portion of the closing costs. In each case the seller is initially carrying 100% of the financing. I'm then immediately refinancing with a bank that is willing to finance 75% of ARV which will fully cover the purchase price including repair costs. In one case I could potentially walk away from closing with about $800.00. I'll have $39,000 in equity in one property and should generate a positive cash flow per month of $225,00. The second property will have $30,000 equity with a positive cash flow $251.00. These two deals may not qualify for the great catagory but I don't think their to shabby for my first deals.

Tony

I am self employed and can't prove my income. My credit is excellent (800 score). I have some real estate deal experience having bought and profitably sold about 8 properties over the last 20 years. Don't the banks you are talking about lending 75% of ARV going to do a debt payments/income ratio? Can someone in my situation get a loan from a bank?

Hello there my name is Nick I'm almost twenty years old and I'm located in the Los Angeles area Santa Monica to be exact. I'm a few chapters away from finishing the book and I have ran into a snag mentally. I have found a property within my interest and it looks to be a worthy investment but i don't know how to approach the seller with the right financing technique because i dont want to scare the seller away with a rediculous offer and due to me being pretty young its a little intimidating out there, so any advice would be great in helping me create a reasonable offer. I currently have no credit so that option is out. I'm curious to know what direction i should go in. I've provided the link to the website so you take a look at the property. http://www.century21.com/idxproperty/index.jsp?id=CBR25935592
Thank you any imput is much appreciated. Hope to hear back soon.

With the home you were purchasing being an REO, how did you lock up the deal? Did you get the loan approved first and then put a PC on it with the bank that owned the house? What type of loan did you get with your bank (personal loan, equity loan, etc)
Mati