Please correct me if I’m wrong but I determined today that you CANNOT use a 203K streamlined or full rehab if you are an investor that will NOT owner occupy the house at completion.
Is this correct as I understand it?
Next, that puts me back to conventional rehab and 20-25% (with 25% getting me the best terms with my excellent credit) down payment.
I do NOT have mounds of cash lying around. I have savings that I need to divvy between our household emergency fund, our savings for discretionary spending (which I would consider REI investing as discretionary. . . at this point - hopefully business spending in the next several years. . . and the primary house over our heads maintenance slush/saving fund.
So I have determined that at this point I probably have about 10K to put down and 5K to play with for repairs.
I see recommending “jacklegs” and acting as own GC which between my hubby and myself we could do (what the heck does jackleg mean, btw) off of craigslist (what about day laborer centers). (what about insurance for these jacklegs, btw – that thought just hit me).
SOOOOO – if I come across a deal that is truly a deal BUT it is a higher price point than what would allow for a 10K down payment (which at 25% is roughly 42k or so), where could I get the funds? Owner financing?
What are people’s thoughts here on the rehab forum about hard money?
Thanks for the responses in advance!
(and just out of curiosity, I have to type this in word and do a cut and paste b/c the new post section won’t let me type this much – is that just MY computer or others too?)
I see recommending “jacklegs” and acting as own GC which between my hubby and myself we could do (what the heck does jackleg mean, btw) off of craigslist (what about day laborer centers). (what about insurance for these jacklegs, btw – that thought just hit me).
I wouldn’t use day laborers. A couple of guys that aren’t licensed contractors that carry their own insurance. People that you can find on craigslist or the ones that advertise the small classified ads in your local freebie paper.
And with 5K to spend on rehab you are looking for a place that has lots of cosmetic damage, peeling paint, rigging of things that need to be derigged, etc. Or a house that needs a little paint inside and a small roof.
SOOOOO – if I come across a deal that is truly a deal BUT it is a higher price point than what would allow for a 10K down payment (which at 25% is roughly 42k or so), where could I get the funds? Owner financing?
Local banks are great. Especially if you are already doing business with them with something as simple as a bank account. I have a few that I work with locally and they will give me whatever I need including rehab money. When I prove to them how awesome of a deal it is, they see the instant equity and give the loan. I give them a full detailed mathematical analysis of the property and their decision is based on that.
What are people’s thoughts here on the rehab forum about hard money?
I stay far away from hard money lenders. The nasty evil credit card companies will often be nicer to you than them. :biggrin
Our local banker knows we only buy property if it’s going to be a good deal for us. We’re now getting no money down loans with extra on top for repairs to get the places rent ready. Local banks where someone can actually make a decision are where it’s at. Bigger banks have little to no flexibility and some stupid rules. Regions wouldn’t loan for anything under 50k. I told them I wasn’t changing my business model to fit their lending.
I ran into the same thing… But I was having a hard time getting a loan under 100K from the national and regional banks.
thanks for the tips. We have our checking through BOA just for convenience sake since there is an ATM on practically every corner around here and savings at credit unions. I’ll have to see about a ‘local’ bank b/c the location might be local but many around here are actually branches of bigger ones, like BB&T, PNC, etc. But I will try to find the most main street bank around that I can and open something there and go from there - thanks for the tips!
This site is great!