I have been doing my homework and went to the auction sites for the last 3 weeks where forclosure are bidding. All the trustees in my county (st. Charles, MO) required to have all the money pay by the end of the day or next day after you win the bid. I have a good credit , a well pay job, and a healthy bank account. However, I have been searching all over but couldn’t find the lender that will lend cash up front. Have anyone being in the same situation? Any help or suggestion is greatly appreciated!
I believe that is odd to need 100% same day. In my area it’s 10% and then you have a couple weeks to close (I’m told). If that’s the case, you could use HML’s or get a credit line if your financial situation would support it for the price range of properties you’re looking for.
Wow!!! Two weeks before closing for forclosure auction, that is very generous. In my county all the trustees require 100% by end of day. I wish I can work in your county. In related to your suggestion, I talked to a couple of HML sources and they said it would take 2 business day to get the fund and charging 6% up front and 15% APR. Do you think this is reasonable? What loan method can I ask from a financial institude to get a line of credit up to $50,000, do you know?
I may be wrong on the two weeks, I haven’t done it, but that’s what’s sticking in my memory that I’ve been told. The 10% I’m sure of though.
I spoke to another REIclub member a while back about credit lines. She had a couple at 50K each (I think she and her husband seperately held them, maybe). I am in roughly the same position as you, high income, excellent credit, some savings and assets, etc., so I was looking for the same thing - access to quick cash. She told me she had gotten hers through PNC bank (which is out of Pittsburgh, but probably are all over???), and sent me this email:
I never called b/c I’ve been slammed in the day job for the last couple months, but I’m getting ready to do some more purchases, so will be looking back into financing soon. I don’t know if I’ll try PNC or try National City first, who has been very good to me on conventional financing, but I’ve been saving that number just in case. Don’t know if it’s any help to you in your area or not, but the woman I spoke with talked like it wasn’t that difficult to get.
As far as 6% (3K on 50K) and 15% APR goes, it may be a little high, but not much for an HML. I assume w/ an HML there is no early payment penalty, so if you’re investment is good enough to drop 3K and turn around and spend another 3K to refinance (the refi wouldn’t be out of pocket, just added to the total), then it could be worth doing. You wouldn’t be hanging onto the 15% long at all though.
I’m relatively new to this, and only own 3 properties. I’m learning as I go, so take every thing I say with a grain of salt.
Good Luck.