We are looking at two properties in Ohio. One house for 59000 but needs alot of repairs. It 3 bedroom 1 bath with full unfinished basement. My realtor said she could sell it for around 100,000. I estimate 15000 in repairs and holding costs. My partner has a 740 credit score and we are told we can get an 80 percent loan on the fixed up price as the acual first mortgage. I figure that would give us 21000 at close if I am not mistaken. The other deal is a bank owned property that they are asking 79000 and the house only needs a little updating. Also this house is brick. 3 bedroom 1 bath with full finished basement. The comps are coming at 120000. My question is 1. Is it possible to get a loan like that with good credit for the appraisal price instead of the discounted price to cover the improvements and other costs. Then 2. If the loan is possible and we can get 80 percent out at closing which of those deals sound better to you? 3. If we can only get one loan, since one is bank owned and the other privately owned should we get a loan n the one and try to lease option the other one? How would you reccomend putting this together. there is room for negotiations in both prices. Thank you.
The lender will not give you cash at closing. They will give you the lower of 90% of appraisal in its current condition not fixed up condition or 90% of purchase price. Traditional lenders may also complain if the repairs are more than carpet and paint usually.
So say the house is worth 100,000, the bank would loan us 90000 then right? If that is the case if we only have to pay 65000 for the house when would we receive the 25k difference?
No, the bank will give you the lower of appraised value or purchase price. If the house is worth $200k, and you are buying it for $50k, then the bank will give you $45k only. Now, after few months, you might be able to do cash out refi, but check the rules on that. Another option may be a HELOC but again, check with your bank or mortgage broker.
There are some programs out there that may lend you for repairs/construction as well.
Thank you Fadi for the advice.