Financing for foreclosures

[jk4138]

Does anyone have any suggestions on financing foreclosures at the auction? I know that it is pretty much impossible to get any sort of financing since the lender is unable to inspect the property. What are some other creative ways to finance this sort of properties? Any suggestions would be really appreciated. Thanks.

[Mdhaas]

Lines of credit, Credit cards, personal loans, just to name a few.

Make sure that you at least walk through the property(s) so that you have a good feel for what you are getting.

I have preapproved several clients for loans on foreclosure deals and have had loans declined due to roof, frame, and foundation issues that the buyer did not see in advance of making a bid and the offer being accepted.

[4EEM]

Walk through... good.  Walk through with your inspector buddy...better. 8)

[jk4138]

That is the only thing. If you are going to buy a foreclosure at the auction you cant really go into the home and conduct an inspection before you purchase it. Unless of course the owners are willing to do it. How could I get around this hurdle? Another question I have is where would be a good place for someone to get a personal loan being that most likely a bank is going to inquire on what the loan is being used for. Thanks a lot for the help.

[Mdhaas]

I may be wrong, but, if you are purchasing the property, the sherriff should allow you at least 30 days to come up with funds as long as you can provide them with a preapproval letter.

I just completed several in Ohio and that was all we needed.

[jk4138]

That is the problem in Washington State. You have to pay the amount the property was auctioned off for in full within 24 hours. Also I would not be able to get an inspection completed because I would not have access to the inside of the property until I owned it. I was just wanting to see if anyone out there had any creative financing solutions that would allow you to get around this hurdle. Thanks for the help.

[mike_hearne]

What is your exit strategy?  Unless we know your exit strategy, it's hard to tell you how to finance the deal.  For quick flips, or as interim financing, you can use private lenders.  Basically, find someone with $50k, $100k, etc. sitting in a CD earning an amazing 5% annually.  Offer to pay him/her 15% annually to lend you his money without monthly payments; offer 10% if he/she wants quarterly interest only payments.  Secure the note with a Deed of Trust or First Mortgage.  You have the cash you need and your lender is making 15% secured with high-equity real estate.  You can disburse funds within 24 hours, because you don't have to go through a bank's process.  If you want to cashflow the property, this gives you time to find traditional financing, do inspections, etc.  If you want to quick flip the property, get to work!!!  I recommend using this technique in pre-foreclosures, as well.  You can walk through a home in pre-foreclosure and know what you're up against, plus it's a win/win/win/win scenario; you win, the homeowner wins, the private lender wins and the bank wins.  Oh yeah, and you can borrow more than you need...

michael

[jk4138]

My exit strategy is to fix an flip and if need be I will rent out the properties by doing a lease with an option to buy.

Also, I was wondering if anyone has used unsecured lines of credit to purchase a foreclosure?

[ewowens]

Good financing is definately hard to come by. Especially if you have bad credit.

Hope this helps.