I have a motivated seller selling a Washington DC row home. There is about 125-130K left on the mortgage. She is willing to let it go for 325K. The comps in the area are between 420-450K retail. The house is in good condition w/ no repairs needed. The property is a 3 level, 3br 1 bath w/ a full bath in the basement. I’m thinking obtaining a hard money loan to pay off the existing mortgage and giving her the cash she will need to move and some cash she will need to close on her new home. Seller may be willing to hold a carry back 2nd for the balance.
Exit strategy - just sell it retail to an owner occupant or investor as fast as possible.
Is this what you would do, or would you do something different? I would appreciate any help/advice.
How long will the property stay on the market and can you afford to hold a hard money loan for that long?
You should be able to get a loan for the full amount via hard money looks like 75% LTV.
Why is she selling at such a drastic reduction in cost? Why wouldn’t she sell it on her own at FMV? Is there something wrong with the property or the owner’s credit?
If she is in a difficult situation (avoiding foreclosure), then you may be able to finance just enough to get her out and on her feet and she can hold a private 2nd (with a moratorium on payments) until you sell in 30-60-90 days. This will keep you hard money costs down.
This sounds like a sweet deal, cover all your bases and seems like you can walk away with a winner.
Best of luck!
When getting hard money financing, make sure you can serivice the debt on the property. Only go hard money if it is your last resort. I let my clients know all their options before I find hard money for them. Again, unless you gotta have speed or you have challenged credit, hard money should not be your first option. There are other creative programs out there. I hope this helps.
Keith ;D
Yeah the more I look into it the more I realize hard money isn’t the move here. It will be prohibitively expensive first off, secondly I couldn’t even swing one month of that debt service (even an IO payment at say 15% would be over $4K/month).
The reason she’s selling low is she needs to be in her new home in GA by June 30th, and she needs this money for down payment and moving costs.
Seller called this morning. Found out she will be moving out tmrw to stay with her daughter so it will be unoccupied. Also she volunteered that she’s willing to deed the house to me subject-to for $335K but she’d like to get her loan paid off and get the cash. How does this change things?
I have good credit…how about getting the deed then getting a 75% HELOC from a bank as a 1st mortgage to pay her off? Much cheaper. But again, will this fit into this limited 3-week timeframe? And how about title seasoning?
Thanks for your replies.
This is a much better scenario. T
here are programs that have no seasoning on the title. So, once the property is in your name, you could do a refinance at 75% of the value. I hope this helps. If this is what you decide, it would be faster if the paperwork was “walked in”. That way it can be recorded the same day. This will speed up the process.
There are fast underwriting programs that could have you approved within 1hr. All you would need then are the basic stuff (appraisal, title work, insurance, etc.). I hope this helps.