I currently own my home (mrtg)... I have credit score 660 or so as does my wife.. we want to buy a house to rehab and sell.. buy for $60k, invest about$15k- $20k , should sell for about $110 hopefully...... What is the best type of mortgage we should get to purchase the home as an investment property with no $ down if possible......
2006-09-15 09:21:06 · 7 answers · asked by hog_wild 1 in Business & Finance ➔ Renting & Real Estate
First of all - don't listen to the people telling you it can't be done. Just be sure you KNOW your local market. If the numbers are right, then they are right.
The answer to your question depends on whether you wanted to use your own money for the rehab. There are plenty of hard money/rehab lenders out there (like rehabloans.biz or brookviewfinancial), depending on where you are located. These are great if you want to finance the rehab costs (and even the closing costs) and expect a quick turnaround. The rates are generally higher, but if the deal numbers are right, these can be a GREAT way to go. Some will defer payment of interest for up to 6 months.
I personally used a couple of rehab loan programs from banks local to the rehabs. They offered (re-)construction loans that would finance the purchase of the house and the renovation costs. For example, say the house costs 60k, takes 20k to rehab and will be worth 100k after rehab. The typical rehab loan program would loan 60k at closing and escrow 20k for you to draw against during renovation. That accounts for a total loan of 80% of the after-rehab value of the property which is a standard loan to value (LTV).
The cool thing is, if the property cost, say, 50k and took 20k to rehab, but was worth $100k after rehab, the bank may still loan up to 80k which can go toward closing, or in some cases in your pocket.
Usually it is local banks that offer these types of programs. See what you can find and check with any real estate investor groups in your area.
Good luck!
2006-09-16 01:32:27 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Flip is out of question. Housing market continues to slump. Unless there are ways you can "sell short" a house, like stocks.
http://money.cnn.com/2006/09/08/real_estate/caught_in_the_bubble/index.htm?postversion=2006090814
http://money.cnn.com/2006/09/05/real_estate/Ofheo_home_prices/index.htm?postversion=2006090514
If you want to buy and hold, then lender will give you money for sure. Probably charge you a higher interests rate and extra insurance on the loan for not having the down paymen.
Would you consider delaying your plan? Professional investors are careful in choosing each investment that would be near or immediately cash flow positive. With overpriced housing market, that is not possbile.
For example, it costs $500,000 to $550,000 to buy a two bedroom units in Sunnyvale California. Mortgage monthly payment with nothing down is $3500 to $4000 a month with 7% APR. The rent one can collect from such unit would be $2000 a month. Therefore, for each unit you buy, you would lose $1500 a month.
* We assume tax benefits would cancel out with tax and maintenance fee. Please consult your CPA.
**If you have large down payement, the rate may be lowered.
Another important factor to consider, home price may not appreciate as much anymore. In most area of the U.S., housing price stopped going up as inventory continues to build up. It is normal to see a correction as a boom that lasted for several years.
If you are investing new money in to real estate, this may not be a good time as the potential return on investment is small compare to the high risk of lower home price.
If you are doing a side way move, meaning you are selling one to buy another one, then it is acceptable.
Nothing is absolute, but housing market is very likely undergoing a correction and this is only the beginning. Some say this would be a soft landing (0 to 10%). Some say a big crashing is coming (10 to 20%).
Good article when you want to put in bid, negotiation.
http://biz.yahoo.com/brn/060909/19463.html
2006-09-15 21:48:31 · answer #2 · answered by Price is what you pay for value. 3 · 0⤊ 0⤋
I would do 100% financing on the investment property and then get a line of credit on your primary home for the repairs.
Matt
http://www.diversifiedlender.com/
2006-09-15 14:03:56 · answer #3 · answered by Matt J 3 · 0⤊ 0⤋
Try one with an ARM.. try a lender not a bank.. you will get approved easier..with less down or no down... and you can finance your closing costs. Dont let the adjustable mortgage rate scare you.. if you flip it and get it sold soon enough, you wont have to worry about increasing rates.
2006-09-15 09:23:41 · answer #4 · answered by Serious Mandy 4 · 1⤊ 0⤋
right now is not a good time to do that since within the past five years the cost of houses have doubled and people are refusing to buy until the prices come down (which means you will lose your shirt if you do this now).
2006-09-15 11:30:00 · answer #5 · answered by sophieb 7 · 1⤊ 0⤋
Look into interest only, or a 15 year..
I have no idea really, but worth a look see..
2006-09-15 09:24:00 · answer #6 · answered by limgrn_maria 4 · 0⤊ 2⤋
http://www.breakingbubble.com/index.htm
go for it Mr.Flipper some has to be suck holding the bag
2006-09-15 13:26:08 · answer #7 · answered by Anonymous · 0⤊ 0⤋