I want to know from real estate investors to see if this is legal and if it would be a good deal.?

Question

I want to purchase an undervalued single family home in las vegas. It is comped at 570-600 thousand and others in the area are listed in the 650s and up. Its a 3300sq ft 4 bdroom home. they are taking offers for 4 weeks and the listed price is 400k. They said that the best offer after the 4 weeks will get the home. if I offer 425k and get the home, will i be able to cash out refi immediately for 525k plus Closing costs and pull out 100k, then put in on the market for 565k. Would that be a smart move or is it illegal to refi within a year?

Answer 1

You have made some incorrect assumptions.

There is a reason it is less then the others, I can't say what it is w/o looking, but there is one.

Also, the LV market is bad right now, and getting worse. Too many people there signed loans they could not afford and created havec.

It is legal to refi quickly, but you will have to pay the pre-payment penalty, which would be about 60k.

That said, you are not likely to get more then the sales price on the home unless you have lots of other property that the bank could have if you default. Selling it for 425 sets the value and will even lower the comps on other homes around it.

Your other false impression is that you will get more then the people selling it right now can. Unless you put al ot of money into it and get lucky this isn't going to happen.

Can you make the payments for 6 months while it sits?


So, as an investor, without seeing the property in question, I would have to say this is NOT a good deal, but is legal to do.


If you are looking to make money in the LV market right now you need to buy houses that you can RENT for more then the mortgage. All of these people who make silly choices need to rent somewhere, and they can't even afford to rent their old houses. That is the present money market, sell them later when the market turns again. Smart investors are grabbing up inventory right now.

Answer 2

BEFORE you even make such a move, you are advised to thoroughly check what such a property is going to appraise at in Las Vegas. The bottom has fallen out of the market in Las Vegas, and you may well discover that, in spite of 'the comps and other listings in the area' this home may only appraise for what you actually pay for it.

For about $100 or so, you can hire a professional appraiser to do a "market value appraisal", which is not the full document laden appraisal required by lenders, but will give you an idea what value an appraiser will attach to such a property.

Relative to your financing inquiry, it's LEGAL to refinance quickly, but you may discover that your original financing package contains a 'prepayment penalty' of up to two years.

Do your homework BEFORE you bid on this place.