I came across a deal this morning on a SFH , 4bdms, 2 bath, the house needs about 50-65K in updating and remodeling. The owner is asking low $300, he is an extremely motivated seller and perhaps I can get it on the mid $200. The seller is willing to hold the mortgage 6-12 months with a 10% downpayment.
However, the house is currently rented with a lease that expires next month and the renter is considering of buying the house after I fix it. Here comes the catch, the renters credit is lousy on the high 500 and I’m afraid that they won;t qualify for a conventional mortgage.
What would the house appraise for when completed? What does the seller owe? Why wouldn’t he just sell the house to them now? My guess is the seller needs to explain some of these things so that you have a better understanding of what the “Big Picture” is…maybe he’s motivated because they haven’t paid his rent in 4 months and he’s cashpoor…I always try to get the entire scenario, even if it means being really nosy when a seller is trying to unload a house that seams to have so much upside potential…good luck.
With a high 500 credit score the borrower will most likely NOT qualify for “conventional” financing, but may qualify for a Subprime loan. Just be aware that subprime loans mean they will need help with the downpayment (they probably don’t have one), which means you’ll have to hold paper. Factor that into your final numbers on what you can expect to get for profit…
As the other poster has indicated, your future home buyers will need to go non-prime.
As of this writing (I say this in light of several non-prime lenders closing their doors in the last 60 days) a borrower with a 530 mid FICO-FULL DOC-55 DTI-2 months of reserves-6% seller concessions allowed can secure a combo loan for 100 CLTV (need a 570 for a 1 loan-100 LTV loan).
While the both of you have some time, you should encourage your renters cum home buyers to work on their credit (pay down debt, dispute inaccuracies, etc.) so that they are in a better position when the time comes.
mtgman46
the house as is was appraised at $380K, after repairs it should be value at $425-435. the reason that he’s not selling the house directly to the tenants is because of the credit situation. the tenant wants to wait few (3-6) months for her credit to go up, in the meantime the seller wants to let it go and get some cash upfront.
My intention is to get the house at $285K from the asking price of $324K, plus it needs $50K in repairs and updating, based on these numbers there should be some profit.
Why not just buy it, rehab it, and then owner finance it to the renters with a balloon payment due after a year or two. This way they will be able to stay in the house, they will continue making the payments, and they will be more motivated to get the loan refinanced knowing that they will have a balloon payment coming up in 12-24 months. Hope this helps.
that’s a good idea, my concern is the monthly payments. The tenant is currently paying $1600/month, if I sell them the house for $375K then their monthly payment is close to $3K which is almost double compare to what they are paying. I’m afraid that they would default on the payments.
ITS ME you can make the mortage note any way you want it your making it >>> it can be as they keep the same monthly payments with a large deffered payment in 2 or 3 years >>> and you can sell off the whole note or just the deffered payment
There are several different ways to approach the deal. You could go with a purchase rehab loan that rolls into permanent financing. You could defer your payments for several months while the work is being done. You could also go with an option arm to keep your payment low at least for the first year. Sounds like you have a pretty good deal. Good luck with it.
lease option to him with a 12 month credit repair prog. I have had amazing results. does the borrower have a good job? Thats the key income. Also you can lock in your profit up front and take back the house if he defaults. I can set the whole thing up including financing. Let me know
i guess this would lead into the question do you work in all 50 states??? BUT this one is in washington state but i work else where as well CAN you fill me in on your program as well ??
basically lease option them the property for 12 to 24 months. Lock in your profit and option price today. THis gives your ‘buyer’ 12 to 24 months to get their credit in order. I work with a company, Axion that gets amazing results in just 90 days. The key is income, they have to have a good job and actuaLLY be able to make payments on the home. we dont need to verify it, but it needs to be there. Let me know and I can help you get set up.
the house is located in Putnam County , NY. I like your idea of leasing the property with the condition of a credit program.
Does the tenant needs to give me a chunk of money upfront?
where do I get info on a credit program?
I’m not familiar with “lock in your profit and option price today” sorry for the ignorance.