Pre-approved for HML???

[abinvestments]

My partner and I were thinking of purchasing properties at auction.  We viewed an auction last week and the property we were looking at went at a very good price to the high bidder. 

My question is, how do I or can I get pre-approved for a HML so that I can know what kind of money I would have to work with for the next auction.  We have our eyes on some property and definitely don't want to bid, win and then can't get the loan.  Is there another route?  We don't have money to get started.  I know we would need 5% at time of auction, but that we could swing.  I have read so many people who started with no money. Any suggestions on what we can do?  Please help.

[DeeinAustin]

I haven't been on the board here in a few weeks. I'm wondering if you're aware of how tough it is to get an investor loan, even hard money. Private lenders are tightening their wallets too and going with trusted investors who perform.

If you're new at this, the first step is to check your local investment club for lenders to see who is willing to work with you and if so, how much they're willing to give. Most likely, they still want 65% ARV deals, which may not be easy to find.

[jparkx1]

sorry this might be off-topic....but what happens if you win an auction and then unable to actually purchase it?

[REI4ROI]

You lose the security deposit...

Regards,

Scott Miller

sorry this might be off-topic....but what happens if you win an auction and then unable to actually purchase it?

[REI4ROI]

Welcome back...

Liquidity for investors seeking <=80 LTV cash out refinances is still pretty fluid and I'm not aware of any national or regional squeeze on HM either (that doesn't discount that the local players might be shutting the faucet off). 

Regards,

Scott Miller

I haven't been on the board here in a few weeks. I'm wondering if you're aware of how tough it is to get an investor loan, even hard money. Private lenders are tightening their wallets too and going with trusted investors who perform.

If you're new at this, the first step is to check your local investment club for lenders to see who is willing to work with you and if so, how much they're willing to give. Most likely, they still want 65% ARV deals, which may not be easy to find.

[REI4ROI]

Getting pre-approved for a HML isn't a difficult task---most HM lenders have pre-qualification (i.e. POF) and pre-approval processes in place. 

If it is your intention to purchase rehab properties at auction, I suggest:

a.  Have your GC handy (to compute cost of repair).
b.  Consider paying an appraiser a consultancy fee (to compute as is value and/or future market value)
c.  Consider dragging your realtor along (to provide after repair comparable values)
d.  Only bid on properties in which the cost of purchase & repairs doesn't exceed 55~60 ARV. 
e.  Get qualified for 70 & 75 ARV HMLs in addition to a 65 ARV program (to cover margin of error and miscalculation). 
g.  Don't use all of your cash reserves towards auction property security deposits (you will need to be able to self fund rehab before getting reimbursed by escrow). 
h.  Don't expect the HM lender to fund the security deposit. 
i. Don't purchase multiple properties at one single auction (regardless if the investor says they don't care) until you have an established relationship with the investor. 

I fund a number of investors that take this approach and this is what I have gleemed from the experience---hope this helps you with your future intentions. 

Regards,

Scott Miller

My partner and I were thinking of purchasing properties at auction.  We viewed an auction last week and the property we were looking at went at a very good price to the high bidder. 

My question is, how do I or can I get pre-approved for a HML so that I can know what kind of money I would have to work with for the next auction.  We have our eyes on some property and definitely don't want to bid, win and then can't get the loan.  Is there another route?  We don't have money to get started.  I know we would need 5% at time of auction, but that we could swing.  I have read so many people who started with no money. Any suggestions on what we can do?  Please help.

[abinvestments]

Thank you all very much.  EZ your answers were exactly what I "figured" should be my approach and you confirmed it.  I have prepared for most of what you stated, just need to get pre-qual. And in no way am I ready to purchase more then one property. 

As to give more info...
My partner and I have taken a "peek" at the property.  It looks like it was an eviction.  Doesn't look like a bad eviction (e.g. holes in wall, destroyed property, unkept) from what we saw thus far, just missing appliances, yard full of weeds, poorly constructed "deck" (and that's a stretch) and a broken window or two.  So in our quick assessment, this would be perfect for a first timer.  I guess what is called a "lip-stick" job (paint, landscape, add patio, etc.).  Once I have better #'s I'll run them past you pro's.

The date of inspection is 3 days before auction and then again  2 hours before auction, but the auction is over an hour away.  So I actually only have the one day.  I was able to get into a previous property that went to auction outside of the inspection date.  Yes, it was legal, as my agent knew the listing agent.  I'm hoping to do the same here.  I prefer not to try to squeeze my time of assessment in the 1 day 3 hour window they give.  I want to get all my numbers in order.  With this potentially being my first, I want to make sure all is in order the best I can and to know my maximum offer. 

It was amazing to see seasoned investors stop bidding even when the new offer was only $500 more than previous bid.  I want to be at that point where I know my exact numbers and what will work and what won't work for me.