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Author Topic: Advice needed QUICKLY, thanks in advance!  (Read 9461 times)

Offline bearcapital

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Re:Advice needed QUICKLY, thanks in advance!
« Reply #15 on: March 04, 2006, 11:41:35 pm »
Sounds like to me it is a pretty good deal.  You might want to consider a partner on this deal.  Atleast someone who can help fund the project.

Offline DaveMuscato

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Re:Advice needed QUICKLY, thanks in advance!
« Reply #16 on: March 05, 2006, 12:28:16 am »
Thanks so much for all the advice, guys.  I really appreciate it.

My FICO is actually a littler higher than that - I'm always conservative on the good points and I overestimate the bad points, just to make sure I'm not getting into a marginal deal.  It's just a good habit when you're evaluating investments, IMHO.

Last time I checked my credit, my one credit card had a balance of $1300 (limit is $4000) that it doesn't have now.  It would not surprise me if my FICO is closer to 700.

I'll keep you guys posted with updates.  I sent out about 20 emails to various hard-money lenders and other investment companies last night.  More coming soon.

Thanks,

Dave

Offline DaveMuscato

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Re:Advice needed QUICKLY, thanks in advance!
« Reply #17 on: March 07, 2006, 08:58:22 am »
I found a mortgage broker, Ben Carmona (bencarmona.com), who works with some hard money lenders in St Louis.  I have given this a lot of thought and I think that hard-money is the best way to do this, given my (lack of) income and short credit history.

This broker is able to get me a loan for 70% of the after-repaired-value of $700k (i.e. $490k).  To do the deal, they'll need 5 points and 4 structured payments set aside up front.  The payments would be $5,716 (14% APR, interest-only pmts for a six-month loan), and after six months I would refi with a no-doc ARM, hold the house until the spring of '07, and then resell when the market is a little healthier.  Subtracting $24k in points and $23k in structured payments, that leaves me with $440k for the purchase and rehab.  I estimate a total rehab cost of $240k including 20% padding above my highest bids, so this would leave $200k for the purchase.  The estate is/might be willing to finance as much as 1/3 of the purchase price on a junior lien; therefore I could pay up to $300k for the house total (if the estate carries $100k).

I would like to stress that I would prefer to get a loan for only 65% of the ARV ($455k), in which case my maximum purchase price would be about $265,000, including $88k of seller financing.  I think there is a strong possibility that the sellers will agree to this number or even less, and the 70% loan will not be needed.

Three possible deals would look like this:

IDEAL FOR ME:
Purchase price $215k, $45k check back at closing for my work cleaning out the house, with a 33% owner-carry 2nd mortgage ($71k).

MIDDLE RANGE:
However, I would still agree to a $250k purchase price, with a 30% owner-carry 2nd mortgage ($75k), and a check back at closing for $30k.

WORST-CASE BUT STILL WORKABLE:
The MOST I can afford and still be able to swing the deal is a $300k purchase price, with a check for $20k back at closing, and the sellers financing 27% ($80k).

What do you guys think?

Thanks in advance for your advice & opinions!

Dave

Offline EAlston

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Re:Advice needed QUICKLY, thanks in advance!
« Reply #18 on: March 07, 2006, 12:12:52 pm »
Wait!

Is your Hard Money Lender going to allow cash back at closing?  Most HML's that I've looked into all seem to want to put all overages into escrow (along with the rehab funds).

So, you said that you don't really have any income, right?  So how are you going to pay your monthly payments on the HML?  And, how are you going to pay for the rehab?  Most rehab funding is held in escrow and paid in arrears (meaning, they reimburse you for each stage of work AFTER IT'S COMPLETE!!)

It's like catch-22, you're borrowing the money to do the rehab, but they don't release the funds until after it's done . . . .


Quote
Three possible deals would look like this:

IDEAL FOR ME:
Purchase price $215k, $45k check back at closing for my work cleaning out the house, with a 33% owner-carry 2nd mortgage ($71k).

MIDDLE RANGE:
However, I would still agree to a $250k purchase price, with a 30% owner-carry 2nd mortgage ($75k), and a check back at closing for $30k.

WORST-CASE BUT STILL WORKABLE:
The MOST I can afford and still be able to swing the deal is a $300k purchase price, with a check for $20k back at closing, and the sellers financing 27% ($80k).

What do you guys think?

Thanks in advance for your advice & opinions!

Dave  

Offline DaveMuscato

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Re:Advice needed QUICKLY, thanks in advance!
« Reply #19 on: March 08, 2006, 05:19:35 am »
I told the mortgage broker I'm working with about the money back at closing, and he didn't mention a problem with that.  I'll ask him directly though; thanks.

Re the catch-22, yes, it's an issue!  I do have some funds available, and I do have income, although it's limited (~$1k/mo). If it works for me to get a check back at closing, I will have somewhere between $20k-$45k liquid that I can use for the first phase of the rehab.  Also, the first phase is relatively inexpensive, because I'm doing a lot of it myself - essentially, I'm paying myself to clean out the house.  I'm hiring a friend to help with that part, but for far less than fair market value, and we should be able to put a figure to the HML that they'll agree with, to release after the cleanout, which I can then use for the first phase of the actual remodeling.

I'll keep you posted.  If you have any questions or advice, please don't hesitate!

Thanks,

Dave

Offline Mortgage Mark

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Re:Advice needed QUICKLY, thanks in advance!
« Reply #20 on: March 08, 2006, 04:20:59 pm »
If he can't offer cashback at closing let us know.  You can definitely find somone to offer it.
Mark Forsyth
Sterling Mortgage Group
[email protected]
916-760-8834

 




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