Rehab Financing Help Needed......

I have been living and paying the mortgage (only $400/month) of a house owned by my mom for over 8 yrs. We have worked out an agreement to buy the hoiuse from her for $160k, this offer is exclusive to me and other than our agreement the house is not for sale. “As is” the house could sell for at least $205k, however if “fixed up and updated” I beleive that it could go up to $250k. Similar houses in the area have gone for $265k. Also in our agreement, I have her approval to do all the upgrades now without having to purchasing it first. So I’m looking to find an investor to finance the “upgrades” about $20-$25k then sell it without actually having to purchase it myself, figured it would save a lot of time and money. This way I would get anything over the $180-$185k break even point and she would get her $160k.

My problem is that due to illness I lost my job about 2 yrs ago, I perfecdtly fine now but financially I’m a mess… most likely looking at file bk. So I’m looking at this as as opportunity to help get me back on my feet.

Is this a good plan? What kind of terms would be “fair” for an investor? How should I work in the fact that I will be doing all the work?

Any advise that you could provide would greatly be appreciated.


Howdy Dan:

You may be able to get the money but it would be a long shot. You can not put up the house unless you own it. The only way is to get your mom to help you borrow the fix up money. You should offer to split the profit if she helps you.

I would say buy the house and REFI it the day after closing for cash out. Lots of lenders will do this and with the right guidance (ie set up with who and when ahead of time), you will have no penalties.