I am in the middle of negotiating a contract and could use some advice from you seasoned investors.
If a contract is written for $78k (with the seller contributing appx 4k towards my closing costs) and there is about $16k work to be done to it ($10k foundation, $2k HVAC, $4k cosmetic) - how can I write the addendum that I want to raise the price by $16k and have them pay xyz foundation guys, xyz A/C guys, and Paint’n Paper guys (aka. my company) at close of escrow? My (very new) Realtor was trying to answer my questions but I don’t have enough faith in her to truly trust what she says. Do I get an Inspection, get estimates, write the addendum - in that order? Do they do the work before or after close? I am trying to do this with as little OOP cash as possible.
If all my calculations are correct (and I tend to over-analyze everything!!) I can either sell the property and make $7k, or rent it section 8 for $500/month CF
Natalie,
I haven’t done one exactly like this, but here’s my understanding. On a typical loan seller contributions in total are limited to 6% of the sales price. That amount won’t get you there.
Sellers most likely aren’t going to shell out dollars for repairs up front unless there is significant earnest money at risk.
You could look into Nehemiah, Genesis, and/or buyersasisstance.com (I think) to see what programs they offer and if there’s a way to make it work combining an increased sales price with seller contributions. I’ve never used any of them so they may be owner-occupant only, although I’ve heard the buyersassistance can be used for non-owner-occupant.
Do you have an investor you could use to purchase the property? Perhaps a hard money loan purchase and then refi with more traditional money once repairs are complete?
I suppose there are programs where you could withhold more than the 6% and have those funds held in escrow after closing and released as repairs are completed, but you’ll probably need to find a good loan officer who has access to many different lenders.
Sorry I can’t be more help and hopefully someone else has some decent advice. Typically in this type situation the responses I’ve seen border on fraudulent actions so double-check any possible solutions someone gives you.
I have been told by my Mortgage Broker that I can have someone assign the contract to me and do a simutaneous close and write me a check after closing for the repairs. I have a “someone” that will do this and I will in turn compensate him a couple hundred bucks for the help. In other words, he will buy the house for $74,500 and sell to me for $92,500 and close the same day. He will deposit his 18k check and pay me $17,800 out of his account. The only down side that I see is a higher monthly payment and higher down payment, but since I plan on fixing it up and re-selling, I like that alternative as opposed to using my own $18k…Creative?? or bordering on illegal??? What is your opinion?