Hello,
I have a unique situation. In 2002, I sold my house and left the US to live overseas. Until that point I had a mortgage, credit cards and had never missed a payment.
Living overseas, I never used my credit cards, so I cancelled them. I also rented, so no mortgage. I also invested in real estate and did well, leaving me with about $70,000 when I returned to the US a couple weeks ago.
I am looking to buy an investment property. I’ve located a duplex that costs $40,000 and needs between $12,000 (best case) and $20,000 (worst case) worth of rehab. Projected rents are conservatively estimated at $1700/mo.
I would like to buy the property with cash, begin rehab, get it appraised once essential repairs (roof and plumbing) are made, and get a loan of about $20,000 to $30,000 and then complete the rehab and keep a healthy reserve. Comps are between $80,000 and $100,000. I would expect that this property would appraise for at least $70,000 after essential repairs were completed (before cosmetic upgrades were performed).
That would give me an LTV of 28%-42%. I’m ok to pay a bit higher rate for a loan if needed, but given the low LTV, I should think I could find something a bit more competitive. All banks/lenders have basically given me a flat “no” based on my lack of credit for the past 9 years.
Despite the fact that there’s a good chance I could do this with no loans, that leaves me with low (or zero) reserves and not building any new credit. I’m ok with a hard money loan if it can go on my credit record, but I don’t think it does.
I have applied for secured credit cards and just started using them.
The property is located in Montgomery County, PA. I will probably be an occupant at the time of loan application, but do not plan to be an occupant long-term.
I’d like to know what people think are the best options for my situation.
Thanks,
-Rick